If you have ever sold a home, you can sell your business
Owning a business in a small town has many benefits, but one of the drawbacks is the difficulty of finding a buyer for your business when you decide its time to move on. The pool of potential acquirers is smaller and capital for buyers is harder to find. But if you understand the process of selling a business, then you can take steps to minimize the barriers to selling your company.
Selling a home and selling a business are remarkably similar tasks. If you’ve ever felt intimidated or confused about the process of selling your company, just think of the transaction in the same way you would if you were selling your home. This is the third in a multi-part series. Start reading with Part 1 now.
Step 4: The showing
Once your agent puts the sign on the lawn, he or she starts scheduling showings. Potential buyers and their agents walk through your home and have a chance to see first-hand what you’re selling.
When selling your business, potential acquirers will want to schedule a showing—called a “management presentation” in Mergers & Acquisitions (M&A) parlance. The management presentation is your chance to paint a picture of what you have built and the future you see for your business and industry. It’s also a chance for the potential buyer to meet you.
Just as a stranger walking through your home will generally be gracious and avoid making negative comments about your choice of decor, the potential buyer of your business typically asks only polite questions at the management presentation, steering clear of saying anything you might take personal offense to (those comments and questions are usually saved for due diligence).
You’ll get one trick question during the management presentations:
“Why do you want to sell your business?”
It may be tempting to explain how tired you are and how much you need a vacation, but don’t. The prospective buyer wants to know you plan to stay on for a while to help them run your business. Stick with an answer like “I’m at a stage of my life where I’d like to create some liquidity for the value I’ve created so far and find a way to participate in our next stage of growth”.
Nail the trick question and you’ll probably get to step 5: “the offer”, which will be the subject of next Wednesday’s post.
John Warrillow is the author of Built To Sell: Turn Your Business Into One You Can Sell. Find out if you have a sellable business – and what you could get for it – by taking the 10 question Sellability Index Quiz at www.BuiltToSell.com.