George Fricke had owned Bartlett Yarns Inc., a knitting yarn manufacturer in Harmony, Maine, for five years when he started to think about selling out. He had known from the beginning that no one in his family was interested in taking over the company, so his strategy had been to "build up the business and then take a capital gain on it," Fricke, now 63, says.

Although Fricke had anticipated that selling Bartlett could take as long as five years, he ended up completing the process in three. He feels he handled the sale well, in part because of significant advance planning. For example, when he first bought the business after leaving a career with a New Jersey pharmaceuticals manufacturer, he hired a Big-Eight accounting firm, Ernst & Whinney, to keep records that would demonstrate his company's growth.

Then after Fricke decided it was time to begin the actual search for a buyer, he approached several customers and suppliers and "let them know I was available," he says. He opened the field to additional candidates by advertising in the Wall Street Journal as well as answering ads placed there by prospective buyers. He also contacted regional brokers.

At the end of two and a half years, Fricke had no serious candidates. None of his suppliers was interested enough to make an offer, and advertisers in the Wall Street Journal who said they wanted to acquire a manufacturer were not particularly drawn to a woolen-yarn marker. Hundreds of people had responded to Fricke's own Journal ad, but many were more interested in touring a Maine factory on a Sunday afternoon than in making a serious proposal. Most regional brokers were either unhelpful or too busy to give Fricke much time. And, though numerous out-of-state brokers answered his ad, Fricke suspected they were high-pressure salespeople rather than professionals concerned about his welfare. Several demanded thousands of dollars in advance payment before they would take his case.

At that point Fricke encountered a large regional broker, Country Business Services (CBS) in Brattleboro, Vt. (See INC., January, page 55.) In CBS ads in the Wall Street Journal Fricke noticed a useful but by no means foolproof clue that CBS might be right for him: "They were appealing in their ads to the disaffected executive, and that was the type of person who was a candidate to buy my business," Fricke recalls. Successful but unhappy big-company executives might have both the means to buy a profitable yarn factory and the desire to relocate to rural Maine.

Moreover, Country Business Services gave Fricke satisfactory marketing help. They appraised his business at about 10% more than his asking price, and then introduced him to three buyers willing to pay that amount. Though one offered to pay 90% in cash, Fricke chose another who agreed to make a large down payment and pay the balance over a few years. Fricke thought the second buyer showed more aptitude for the business. "I felt I had an obligation to the town," Fricke says. "This is one of the oldest wool yarn mills in the country."

Fricke believes few business sellers can avoid talking to dozens of unhelpful people before finding the right purchaser. Even if a seller decides to rely on a broker, it is difficult to find a truly professional one who will understand your company and how it should be packaged.

To minimize the frustrations of selling out, most businesspeople should try to map out a coherent strategy when they first contemplate a sale. Consider the following steps:

* Try to compile your own list of likely buyers from your personal contacts. Customers, suppliers, competitors, and larger firms with related operations are among the best candidates.

* Keep scrupulously honest books for a couple of years before a planned sale, even if this costs extra in income taxes. And reconstruct the profit-and-loss numbers for a few years to present the company in its best light. "You should add in off-balance-sheet items such as perks, bonuses, profit-sharing and pension contributions" that were kept high to minimize profits reportable for tax purposes, notes John F. Creamer, a Darien, Conn., consultant.

*Look for hidden value in your business.Are you carrying real estate on your books at less than market value? Is your customer list worth money? Could the right buyer expand your sales to reach a wider market? Is the business relatively free of strong competition?

* Prepare realistic projections of sales and earnings.

* If the business depends on a lease, cement the lease well into the future. Many businesses lose any value if their lease is about to run out and is not renewable.

* Talk with others in your industry and in related fields, including trade association officials, to learn which of them have been happy with business brokers they've known.

* Watch the advertising of the brokerage firms you are considering for perhaps three weeks to see if they advertise sufficiently and if they advertise different businesses over those weeks. A good turnover tends to attract more potential buyers, many of whom may decide to buy businesses quite different from the kind they originally planned to buy.

* Compare commission rates, and avoid brokers who try to charge a fee up front for their marketing help. Sellers usually pay all commissions, and high rates don't guarantee service. As a rule, brokers handling companies worth a million dollars or more charge fees ranging from 3% to 7% of the sale price. Brokers handling smaller businesses charge up to 12%.

* Be flexible when discussing financing. Most sales -- including Fricke's sale of Bartlett Yarns -- are financed to some degree by the seller, particularly with today's high interest rates.

This is a staff-written report based on research by David Kemp.