Selling your business? Learn how to masterfully answer THE most important question buyers ask to keep deals on track & maximize your value.
Many business owners believe the act of selling their business is similar to passing the baton in a 400 meter relay: once you’re finished running, you get to relax.
In reality, buyers will insist that you stay on for a transition period – anywhere from six months to five years – during which time you continue to work in your business to help the buyer capitalize on the investment they’re making.
THE Question
At some point in the process of selling your business, a prospective buyer will ask you – oftentimes casually – “Why do you want to sell your business?” These eight seemingly innocuous words have derailed more deals than any others.
Buyers ask THE question to evaluate how likely and willing you are to stay on or if you already have one foot out the door.
Obviously you don’t want to lie, but there is a right and wrong way to answer THE question.
Answers like “I want to slow down a bit” or “I want to travel” or “we’ve got a baby on the way and I want to spend more time at home” communicate to a potential buyer that you plan on winding down when they take over.
However, what they want to hear is your intention to help them realize the potential locked inside your business.
Here are some suggested responses based on your age.
If you’re under 40, you clearly aren’t ready to “retire” so you need to communicate that you see an upside in merging your business with theirs:
“In order for us to get to the next level, we need to find a partner with more <insert sales people, distribution, geographic reach, capital or whatever the partner brings to the table>.”
If you’re between 40-55 years old, most people will understand the need to shore up your personal balance sheet:
“I’ve reached a time in my life where I want to create some liquidity from the value I’ve created so far, and at the same time I want to find a partner who can help us get to the next level.”
If you’re over 55, you can start to talk about retirement, but you want to make sure you communicate that you still have lots of energy and passion for your business.
“I’m at a stage where I need to start thinking about retirement. It’s a long way off yet, but I want to be proactive.”
Rehearse your ANSWER to THE QUESTIONS so it becomes a natural response when you are inevitably asked THE question by a potential acquirer.
Are you personally ready for what should be the happiest day of your life?
By analyzing 40,000 business owners and conducting hundreds of in-depth interviews with owners who have recently sold their business, we have determined that there are 4 major drivers that lead to an exit without regret.
Future Vision: Why do you want to exit your business? What do you plan to do after you leave your business?
Personal Detachment: How attached are you personally to your business? Have you built a fulfilling life outside of your company?
Team Involvement: Have you considered how your employees will be treated when you exit your company?
Structuring Flexibility: How much is your business worth to you? What is your bottom line? Have you considered the practical financial questions surrounding your exit?
Click the link below to take your 8-minute, 12-question PreScore assessment and take the first step toward making a profound impact on the second half of your life.
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