Selling Your Business? Here Are 10 Things To Consider

Selling a business can be tricky and complicated. Here are a few lessons I learned from concluding the sale of the wealth management division of my firm.

Photo: Dane King,
Photo: Dane King, President of Stratking Advisory Services Inc.; Source: Courtesy Photo

Recently, as a part of a restructuring plan, I successfully concluded the sale of the wealth management division of my firm, Stratking Advisory Services Inc. Selling a business can be tricky and complicated.

Here are a few lessons I learned from that exercise:


  1. What are you selling?

    Decide what you are going to sell. Are you selling the inventory, clients, assets or everything?

  2. Factor in restructuring costs.

    Take some time and compute your selling costs. This needs to be deducted from your estimated disposal proceeds to determine your net cash flow arising from the sale. Your Accountant should be able to assist in this area.

  3. Sell at the right time.

    It is said that we should “buy low and sell high”; it’s the path to a better, more reliable long-term return. To accomplish this, it’s important to realize that timing is everything. Are you selling high or low? Is this the right time? If it is not, what will you do to prepare your business for sale? Maybe you have never reached a high in your gross revenue yet? Maybe the market and economy is good, so you may fetch a better price? It is also said that time in the market is more important than timing the market.. so should you continue the business a few more years to the extent that the price should go up the longer you hold it? Consider these things carefully.

  4. Sell to the right business or person.

    Take your time and research potential buyers. Are they are good fit for you and your clients? Do you like the owner of the other business? Would you be able to get along with him or her as a client or employee? Do they bring new technology, know-how, distribution channels and access to markets that would enhance your business going forward, so they do not fail and destroy what you worked hard to build.

  5. Get your books and records in order.

    Have your completed last year’s financial statements? Have you filed your business tax returns? Have you completed annual filings? Are your corporate records in order? In this regard seek the services of a professional accountant and business lawyer.

  6. Get a professional business valuation.

    You may have an idea of what your business is worth from your knowledge of your industry, but you may be short changing yourself without the independent opinion of a business valuation professional. “A business valuator is a certified public accountant (CPA) who has chosen to specialize as an appraiser of businesses, both large and small… Business valuators will crunch data about the assets, liabilities, and capital of a company to prepare profit and loss statements and show the financial position of a company.” (Source: Princeton Review)

  7. Consider what’s next.

    You’ve decided you are going to sell the business, but then what? Are you going into retirement? Do you have enough money to retire now? Are you going to start another business and have you created a business plan? What is the cost of starting your new business and how long will it take before it becomes profitable?

  8. Will you stay around for a transition?

    You may be thinking of selling your business and retire to the Caribbean! Wouldn’t that be nice?! The only thing is that many buyers require you to hang around a bit to assist with the transition. How long will a transition take? Is the cost of that time factored into the sale price?

  9. Have a communications plan in place.

    Create a communications plan pre and post sale to address issues with clients, employees, suppliers and business partners. Communications should be internal and external. Hire a professional communications consultant if you do not have expertise in this area.

  10. Complete a risk assessment.

    Selling a business can be a risky process. You need to do a holistic risk assessment of the financial, reputation, career, marketing, tax and business risks of proceeding with the sale. Unsure, then bring in a risk management professional to give you an independent assessment.


This article has been edited and condensed.

Dane King is the President of Stratking Advisory Services Inc., principal accountant with ProfitPAT Accounting and Tax and marketing consultant of Chartered Marketer For Hire. For over 20 years Dane had been helping professionals,businesses and financial services firms grow their wealth, increase profits and reduce taxes. Dane is a Chartered Global Management Accountant, Registered Public Accountant, Chartered Management Accountant(UK),Chartered Marketer and Financial Management Advisor. He is an author and public speaker on a variety of small business, tax, wealth management and marketing issues. Connect with @stratkingadvice on Twitter.


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