12 May For Sale by Owner?
Do you remember the old saying “The person who represents himself has a fool for a client”? Athletes, highly paid executives and persons involved in legal disputes adhere to it. Unfortunately, some business owners do not. No doubt, you’re an amazing person – but you have to admit that you can’t do everything. Otherwise, you would have no employees, no suppliers and no worries.
The fact is when you decide to sell your business you must enlist other professionals. It will be expensive, but the investment you make will lead to a greater payoff. Doesn’t that sound like something you’ve said before? It’s good advice.
What? You still think you can do it yourself? Consider the following:
- Emotions: Even though you may be the kind of person who is skilled at keeping emotions in check, when it comes to your little slice of the American pie, you’re bound to be emotional.
- Judgment: There is no way you can see your own business objectively. Either the limitations of your business are too deeply etched in your soul and you under price, or your expectations far exceed what the economics of your business will support. Either way, you’re wasting time, money and opportunity.
- Time: How much free time do you have? If you’re like most business owners, you work 40 to 70 hours in a typical week. Why? Because your business needs you, of course. So where are you going to find the hundreds of hours that it can take to complete a successful business sale transaction? Now is not the time to let business performance slip. You should focus on increasing revenues and profits and delegate the time-consuming business sale tasks to a good intermediary.
- Special Knowledge, Skill and Experience: You own and run a business. The skills that you have are rare and valuable. But it is unlikely that you are an accountant, attorney or business intermediary. Selling a business takes specialized skills and abilities. You’ll want to gain them through representation.
- Adversarial Wall: Why are representatives used – by individuals, companies and governments – to negotiate important agreements? Because it works. This strategy breaks down the adversarial wall that naturally arises between buyer and seller when the stakes are high. For the seller of a business, it protects the seller’s relationship with the buyer (key to getting a good deal done) when it’s time to get tough. In other words, if you say “I want more,” you’re greedy. If your representative says it, he or she is just doing his or her job.
- Confidentiality: You don’t want your employees, customers and competitors knowing that you are selling your business. It could hurt your company and your sale price/terms. The key is to move swiftly and introduce the business only to buyers who are pre-qualified. Of course, as soon as the business owner approaches a buyer prospect, his identity is revealed. Independent reps can qualify buyers without revealing the identity of the seller.
One thing you may have in common with other business owners is your dislike of paying professional fees. You want to engage their services only when it is absolutely critical. Well, selling your business is one of those absolutely critical times. It could be the most important economic decision of your life. As we discussed above, it will be an intricate and time-consuming task. Even if you could do it, who is going to continue to run your company – and keep it successful – while you spend the 300 to 900 hours required? You will need to budget for the services of three professionals:
1. Business Purchase/Sale Expert (“Dealmaker”)
2. Legal Expert
3. Tax Expert
The only one of the three who is proactive and strategic is the dealmaker. Begin by finding a great dealmaker to handle the project. If all goes well, you’ll have ample time to secure the legal and tax assistance.