The sale of my enterprise went easily for lots of various causes, however the place not right here to speak about that!
I’ll say a fast notice: The one that acquired my enterprise was a straight shooter, negotiated pretty, and handled me equally throughout my transition.
It made the method rather more satisfying.
Nevertheless, which may not occur to you!
Disclaimer over, let’s dive in.
Mistake 1: Not Beginning Sooner
If I may return and do it once more, I’d have began “promoting” my enterprise three years earlier than truly promoting it.
I’d have closely centered on profitability (as a substitute of scaling). I (most likely) may have made 20% extra on the sale if I’d executed that.
Lesson Realized: Begin gearing as much as promote your corporation 2-3 years from promoting it.
Mistake 2: Not Reaching Out to My Community
Once I offered my company, I used a dealer.
The dealer takes 10% of the ultimate assured cash of the sale. The FIRST one that reached out to me and was by the dealer (that I in the end didn’t promote to) was a mentor of mine.
Lesson Realized: Begin networking with potential patrons early, and don’t use a dealer till you exhaust these choices.
Mistake 3: Not Charging Curiosity on Sellers FInancing
Once I offered my company, I solely had a small quantity of vendor financing (which wasn’t an enormous a part of the sale).
Nevertheless, I didn’t negotiate an curiosity on the notice. Once more, not an enormous deal, however simply one thing to say.
Lesson Realized: Know your choices when promoting. I didn’t know you might add curiosity to vendor financing.
Mistake 4: Asset Sale vs. Inventory Sale
When promoting a enterprise, the gross sales course of is commonly structured as both an asset or inventory sale.
Asset Sale: In an asset sale, the client is buying the enterprise’s particular person property. This kind of sale doesn’t embrace liabilities until explicitly agreed upon.
Inventory Sale: Conversely, a inventory sale includes the client buying the proprietor’s shares within the firm, thereby buying each its property and liabilities.
More often than not, small companies are offered as an asset sale.
Each choices aren’t dangerous, however a inventory sale will usually be extra favorable to the vendor.
Lesson Realized: Know your choices when promoting. I didn’t absolutely perceive the distinction till we inked the preliminary phrases.
Mistake 5: Not Being Mentally Ready
Promoting a enterprise takes 6-8 months; let me inform you, it’s a rollercoaster.
All through the method, I had a mentor signal an LOI and again out, the acquisition value acquired slashed (however then introduced again to the unique LOI quantity), and a number of instances after I thought the deal won’t undergo.
Lesson Realized: Be ready for ups and downs all through the method.
Mistake 6: Not Being 100% Out of the Day-to-Day Operations
I used to be virtually 100% out of the day-to-day operations after I offered my enterprise. Nevertheless, I used to be nonetheless main gross sales (as a result of I liked it).
It could have been a bit extra “turn-key,” if I wasn’t nonetheless working contained in the enterprise.
Lesson Realized: Most patrons don’t need a founder within the enterprise in any respect. Get your self 100% out earlier than promoting.
Mistake 7: Not Specializing in the Enterprise When Promoting
Once I offered the enterprise, we had (practically) turn-key operations. Nevertheless, I did take my eye off the ball a bit to do conferences and conversations with the client.
Lesson Realized: If the sale falls by, you continue to need/want a stable enterprise to fall again on.
