Cashing Out- Part 1 -Important Things to Consider Before Selling Your Business

[Stacy L. Alario, FCBI]

Usually the tough decision to sell a business is based upon any number of reasons,including retirement, personal situations (such as divorce, death, illness, or relocation) or simply a desire to do something different. Here are a few important points to consider if you are ready to put your business up for sale.

CONFIDENTIALITY - Before you make any move, remember confidentiality is generally necessary, and in everyone's best interest, in the transfer of business ownership. A lack of confidentiality can have a negative effect in many areas, such as employees may suddenly feel a lack of job security causing the seller to lose some, or all, of valuable employees. Or the employees work ethic and attitude may change if the potential sale is disclosed to them before there is a sales agreement. This can directly affect the sale of the business since the potential buyers may want to keep the existing seasoned, trained staff.

Other problems may be caused with customers and vendors. Customers may look elsewhere for a different source of products and services for fear the business is closing or may not maintain the same level of service they have come to expect. Since a strong customer following is important to the buyer-and often part of the businesses' "goodwill" that makes the company attractive- the seller should make every effort to continue managing the business efficiently (and profitably!)especially while the business is being marketed.

Suppliers, too, may become cautious about credit lines, or may discontinue existing payment terms, insisting on C.O.D. for purchases. This could be doubly detrimental since the new owner will usually want to continue the established credit relationships the business had with its suppliers.

For these reasons, and many more, confidentiality is of utmost importance in the release of information during the sale of a business. Obtaining services of a good business broker who knows the appropriate process and time frame to convey lease terms, location, and day to day operational procedures can help you maintain the essential confidentiality. The careful selection of a professional broker who understands this concept is of utmost importance.

Stacy L. Alario, FCBI and American Business Brokerage have been confidentially representing sellers of closely held businesses for over thirty years. Please call her at [phone]