The Complete Guide to Selling a Business: Ensuring a Successful Transaction

Selling a business is a long and complex process. You may be ready to sell this year or just curious into what it will take to sell – this series will help. The business sale process can be broken down into core stages – from who you need to hire, to what questions you should be prepared to answer, to how to hand off your company once you’ve signed on the dotted line.

There are three common scenarios for a company’s management after a deal closes.

1. Management plans to stay on with the company and is looking for a partner who can help them improve/grow the business.
2. Management plans to transition the business to new management over a 12-24 month period, after which they intend to depart.
3. Management does not intend to stay on and will depart after the closing of the transaction.

Of course, this is something to keep in mind as you evaluate buyers. Some buyers pursue strategies in which they intend to insert their own management team. Strategic investors often employ this strategy because the acquisition will be folded into a division of the corporate parent and there’s an existing manager who already runs that division. Other buyers don’t want to invest or acquire any private company where the management team in place does not intend to remain with the firm with a significant ownership stake rolled into the newly acquired entity. Their preference is to partner with existing management and help them run the company even more effectively.

Generally speaking, your involvement in your business does not conclude immediately after the sale is complete. More often than not, the buyer will offer a lucrative contract to you and key executives to help stay on and transition the business. Depending on the terms of the agreement, incentive payment (earnouts) may be included, which are contingent on the performance of the business.

Upon full exiting the company, entrepreneurs can expect to have the mixed emotions of excitement and achievement, coupled with sadness and loss. The emotional fallout associated with the sale of a company is legitimate. Similarly to raising children, entrepreneurs pour their heart, soul, and energy into growing a business that can succeed on its own. Once the business is fully under the new ownership, the most important thing left of its former owner is his or her legacy. At that point take a few months off to rest and relax – at which point you’ll probably be ready to hit the ground running for your next venture!

Sunbelt Business Brokers can help you find that next venture when the time is right. Click here for opportunities in your area.

Some of the material in this blog was taken from Axial Forum