Planning to Sell? How to answer THE most important question
Many business owners believe the act of selling their business is similar to passing the baton in a 400 meter relay: once you're finished running, you get to relax. In reality, most buyers will insist that even though they're now holding the baton, you need to stay on for a transition period. During this time, anywhere from three months to three years or more, you continue to work in your business to help the buyer capitalize on the investment they're making. Each deal is different; however, there is always a timeline that needs to be agreed upon, where your knowledge, experience and expertise is available.
THE Question At some point in the process of selling your business, a prospective buyer will ask you, oftentimes in a casual, understated way "Why do you want to sell your business?" These eight seemingly innocent words have derailed more deals than almost any others.
Buyers ask THE Question to evaluate how likely and willing you are to stay on or if you already have one foot out the door. Obviously, you don't want to lie, but there is a right and wrong way to answer THE Question. Answers like "I want to slow down a bit" or "I want to travel" or "I'm starting a new business" or "we've got a baby on the way and I want to spend more time at home" communicate to a potential buyer that you plan on winding down when they take over. However, what they want to hear is your intention to help them realize the potential locked inside your business.
Keep your response brief, honest and sincere. Here are some suggested responses based on your age, and whether you are merging with an existing business, or selling to individuals. If you're under 40, you clearly aren't ready to "retire" so you need to communicate that you see an upside in selling, or in merging your business with theirs:
If you're between 40-55 years old, most people will understand the need to shore up your personal balance sheet:
If you're over 55, you can start to talk about retirement, but you want to make sure you communicate that you still have lots of energy and passion for your business.
Rehearse your answer to so it becomes a natural response when you are inevitably asked THE Question by a potential acquirer.
If you have any question about how your business brings you maximum value, discover the 8 Drivers of Value and find out how ready your business is to sell - get your Value builder Score. |
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