What is the most important step to take when selling a business?
Entrepreneurs get a lot of advice about what to do to to prepare for the sale of their business. What is the one thing that they should do to ensure they are prepared?
In our experience working with entrepreneurs before and after their sale, we've found the most important aspect to be their emotional preparation. Sure, the investment banker can help in preparing the business financially and getting all the documentation in sale-ready shape, but only the entrepreneur can prepare himself/herself emotionally.
If you've built your company over the years with blood, sweat and tears, the idea of giving up control is hard for entrepreneurs to take. You may think that you will retain control because likely you will be asked to stay and maybe be given a title to go with it, but the reality is that you no longer call the shots. You will be there mostly to transition, be a familiar face for your customers and employees, and work hard for the new owners, but more like an employee rather than an equal partner. This role can be called the "Padre," which is basically the father figure that nurtures and mediates all relationships, is accountable for them, but no longer truly controls them.
This role change can be the toughest part about selling the company. Are you ready for it? This is the soul searching that you need to do well before you prepare the business for sale. Maybe your family last name is part of the company name, and now the buyer will brand the business with its own name and brand. Maybe the business is on its second or third generation and now the legacy of the name will be lost. These are the qualitative matters that don't necessarily get discussed with the investment banker, but can mean everything to you.
Yes, preparing the business to fetch the highest purchase price is a default objective, but selling the company can be gut wrenching if you haven't figured out what's next. This is where an exit planner may help you. An exit planner will assist you in defining what you will do after you sell your company. If you don't have any idea of what you will do next (you can only golf for so long), then having a preparation plan (for yourself as well as the business) is the most important step you can take. When you sell the company, this is ultimately where you want to be. You monetize the equity, take some chips off the table, and you're no longer responsible for every decision. This is what you wanted right? Before you sell, make sure the answer is a resounding "yes."