The Ultimate Guide to Selling Your Business: Rule #1 Explained
The rule is simple: you only get one chance to do this right. Which leads us to the key question you must ask yourself when you decide to sell your business: what does “do this right” mean to you? Does it mean maximizing sale price? Choosing the right buyer?
Ensuring your clients or customers are cared for in the future? Taking care of your teammates? Sale at the right time? The optimum sale terms and conditions? Or a combination of these factors?
When I decided to sell my business about five years ago, my answer to do this the right way for me was:
Make sure our clients had excellent support after the sale.
Find a best fit buyer who would collaborate with me to navigate the challenges of the sale process I knew were coming.
Make sure the interests of my teammates were considered.
Exit the business by X date.
Negotiate sales terms and conditions that were fair for both buyer and me as the seller.
Another way to think of the question of “doing this right” is to think of interests vs. positions. Deborah Graham (www.deborahgraham.ca) is a collaborative family lawyer and family mediator based in Toronto. She makes this distinction between interests and positions:
“A position is what we want (or think we want). An interest is the why beneath the position. For example, a position might be ‘I want a tuna sandwich.’ The why beneath that is that ‘I am hungry and want a healthy food choice.’ “
After each interest, I asked myself three questions:
Why is this important?
And why is this important?
And why is this important?
For example, interest #4 (Exit the business by X date) was important to me because I was burned out and concerned I couldn’t keep doing my job to the best of my ability. That is important to me because a core value I have is mastery. And my core values give me direction in my daily activities.
You’ll notice I did not list a sale price of $X in my definition of selling my business the right way. Even though I had a business valuation in hand, my interests were more important than taking the position of a sale price.
When you’re ready to sell your financial advisor business, ask yourself, “What does selling my business the right way mean to me?” and then list your interests in selling your business. Then ask yourself the three Why questions for each interest. Your answers dictate your next steps.