Selling Your Baby

Canadian Business Magazine - Selling Your Baby

I just came across an article on canadianbusiness.com about selling your business. Since I recently posted 10 Steps to a Successful Sale, I thought I'd post this for reference as well. Of note was the result of a survey that found that most sellers wish that they'd hired an adviser and had a professional evaluation done prior to starting negotiations.

Business owners who’ve been through the ordeal offer important advice to first-timers. A 2008 survey of more than 100 Canadian entrepreneurs who’d sold their firms reveals many of them would have handled things differently if they’d known what they were in for. The poll for Newport Partners, a Toronto-based financial advisory firm for entrepreneurs, found an overwhelming 78% of respondents agreed it was “an emotionally draining experience.” One respondent said, “I thought I was doing okay, but my wife said I was a basket case.”

The survey offers one measure of the high-stress time crunch during negotiations. Among the respondents, 51% concurred that “the sales process was so time-consuming, my ability to run the business was compromised.” That makes sense, given that most sellers handled the chore on their own. Just 40% hired an adviser with experience in selling a business, a step that 71% would now urge other sellers to take. “I wished I had some people to speak with who had my emotional profile and had been through the sale of a business,” said one respondent. And only 33% obtained a professional valuation of their firm, although 74% would now recommend that move to others.

“THE PRICE WILL REFLECT MY SWEAT EQUITY”: The amount a buyer is willing to pay will be based largely on a mathematical formula reflecting variables such as your firm’s revenue, profits and growth rate. There’s no bonus for guts and passion. Still, if it’s any consolation, you wouldn’t have achieved those numbers without your guts and passion.