GROWTH. TRANSFER. LEGACY.
Message or share this on LinkedIn:
By: Justin Sandridge, Certified Business Intermediary|Murphy Business Sales - Baltimore
I often receive calls from small business owners who are finally ready to sell their companies after decades of hard work and who want my help to do it. Unfortunately, for every seller who owns a profitable, desirable company, there are many more who have not properly positioned their businesses to sell. This is one such story.
In the start-up phase, Sam* worked with his nose to the grindstone to provide for his family. Retirement seemed far away, and Sam always had more pressing business and personal issues to handle.
For years, he was involved in the day-to-day operations. He enjoyed a comfortable life, purchased some luxury items through the company expense account, and kept his children on payroll until they finished college. Sam believed in showing as little profit as possible to avoid paying hefty taxes.
After his children were out of school and his mortgage was satisfied, his drive started to decrease. Part of this was due to his age, of course, but the other major factor was a lack of motivation; he just didn't have the same need for money as he did when he was younger. That need had always kept him worried about the future, however, so he kept cash readily available for unexpected circumstances and never put a dime into a retirement account.
In the following years, the revenue was on a steady downward trend and accounts receivable started to rise. Sam didn’t pay much attention to this because he compensated himself regularly and always saw money in his bank account. He lived a modest life and was still able to pay his bills, so why worry?
At age 65, Sam decided he’d had enough, and he was ready to exit the business. His children didn’t want the company and none of his employees had the funds to buy it, though, so his only way out would be selling it to a third party.
Sam called his local business broker, who pointed out some challenges he would face:
In the next decade, 12 million business owners will transition out of their company. The good news is that if you’re planning to sell your business in the next 3 years, there is time to position it for a successful exit. With so many businesses changing hands, you will have competition with other companies looking to do the same, so make your business a lower-risk opportunity today to ensure that you enjoy the next chapter of your life.
Click here to download “9 Steps to Prepare your Business to Sell” from Murphy Business Sales.
*name changed for privacy
Join our mailing list
Follow our LinkedIn Company Page Co
Join our LinkedIn Group