For many entrepreneurs, the eventual sale of a business is the goal behind their business endeavors. They create a thriving company and then sell it to a bigger organization, an investor or a direct competitor. The entrepreneur receives a return on their invested time and capital, while the acquiring party receives a turnkey business opportunity.
While purchasing a business that is already successful reduces the likelihood of the new owner failing, the transition to new leadership may leave the company vulnerable. Business owners intending to sell their organizations may need to plan carefully to help ensure the continued success of the company even after they exit the business.
How can an owner preparing for the sale of their business facilitate a smoother transition?
With hands-on training and support
Executives and owners tend to juggle many different work responsibilities. Even those who may have experience running a business or working in a particular industry may struggle to take over the responsibilities of running a successful company. The current owner may need to offer several months of transitional support where they come into the business and provide on-site training and guidance for the new owner. They can taper their time worked over several months until the new owner is ready to run everything on their own. Offering that support may help buyers feel more confident about making a competitive offer.
With renewed employee commitments
The person running a business has better insight than most other parties into who contributes the most to the organization. Many of those key players might consider leaving for a different position when the current owner exits the organization. Those intending to sell a business may need to approach key employees and negotiate terms to motivate them to stay with the company after the transition. Ensuring that the new owner has the support of critical employees can make it easier for them to assume control over the company.
With reduced organizational liability
Preparing to sell a business requires a thorough evaluation of its current resources and obligations. By identifying financial liabilities and assets that have declined in value, a business owner can address issues that may make the business unattractive and optimize its sale price. They can also help ensure that there are no unexpected challenges that arise shortly after the new owner assumes control of the business. Repairing or replacing aging machinery, paying off financial obligations and otherwise reducing sources of liability before selling the company can be beneficial for everyone involved.
Those preparing for a business sale transaction often need help protecting themselves legally and ensuring a smooth process. Reviewing company records and developing custom contracts with a skilled legal team can put a business in the best possible position for success after a sale.