09 Sep Managing Time to Sell Your Business
One of the most important resources needed in order to sell your business is time. It is the one thing that you never have enough of and it can ruin any deal if you do not use it well. How does time add value to selling your business? How should you expect to use your time during the selling process? How can you buy more time? Whoever can answer these questions will have the upper leg in selling their business, as well as save themselves unnecessary stress.
One of the best ways to ruin the sale of your business is to put a timer on the table and have both buyer and seller race to negotiate a deal that is favorable for both parties. People aren’t the same when they’re rushed – they’re harder to work with, they overlook valuable information, and the quality of their work suffers. Starting the selling process with preparation and ample time allows for both parties to work well with each other. It allows the buyer to request needed due diligence information and the seller time to gather such information. It allows both parties to deal with unforeseen road bumps, which you should expect to encounter. It allows you time to tread through the complexity of conflicting interests and to structure an agreement that favors both parties.
On the other hand, taking too long to execute a sale could cost you the buyer’s interest. Everyone has a timetable and they don’t always align. You should be respectful of the buyer’s time by preparing basic due diligence documents and financial statements that you can expect a buyer would want. Clean out the closet and organize the management team to take care of the operations of the business while you coordinate with everyone else involved in the selling process (lawyers, advisors, investment bankers, accountants, etc.). A buyer will pay more for a ready-to-sell business than for an almost-there business because it saves them time and money – and for most people, time is money.
How should I expect to use my time during the selling process?
As the owner of your business you should expect to be well involved in the selling process. You will constantly coordinate with members of the deal team and make decisions to work out the terms you want. In reality, you should expect the selling process to become your part-time, if not full-time, job. Having a management team in place to take care of the operations of the business will allow you to contribute to the selling process without juggling too many responsibilities.
How can I buy more time?
As you are more prepared to sell your business the process will run more smoothly and demand less time to execute. Being prepared means having a team of experienced advisors guide you through the process, advisors who have sold numerous businesses and know how to deal with the road bumps (taxes, regulations, negotiations, etc.). It means having the proper accounting processes in place. It also means having a management team that is ready to transition through the sale. You buy time by preparing for the sale. You pay a premium for not doing so.