My firm was representing an entrepreneur in the sale of his business services company. We had chosen to move forward with a well-financed buyer, but it hadn't been easy. Both parties had negotiated through numerous issues and terms, making it tough to come up with the perfect transaction. Lawyers had billed hundreds of hours. Our firm had two investment bankers and a dedicated intern working full-time on this deal for ten months, including due diligence, negotiations, and multiple trips across the country.

We were finally ready for a successful close. The wire transfers were in place and ready to go at the touch of a button. We all sat in a nice conference room with hot cups of coffee and that buzz of excitement in the air when a transaction is on the verge of being completed.

The owner stared at that last line on the contract for a few seconds. Then a few more. Someone coughed uncertainly. Then my client put down the pen and said, "I'm sorry, guys. I just can't do this." The deal was dead.

Our client had thought he wanted to sell, and had spent ten months and a considerable amount of money working towards that goal. So what went wrong?

When it came right down to it, the money he would earn from the sale and his retirement plans just didn't matter. He was too emotionally committed to his company, and he couldn't bear the thought of turning control of it over to someone else.

Don't let this happen to you. If you're thinking of selling your company, make sure you can answer these three questions first.

Who do I want to sell to?

There are two types of buyers: strategic and financial. You need to identify which is right for you. A strategic buyer is generally a larger corporation that will buy you out, take over your operation, and incorporate your business into theirs. You simply walk away with the proceeds. Or, you could be looking for a financial acquirer, who will provide you with growth capital and allow you to keep running the company, and continue to own 20--30 percent that you can sell 5--7 years later at potentially an even higher premium.

Once you know what kind of deal you're looking for, you need to find an actual "perfect fit" buyer who meets all your needs, financially and culturally. If you can't determine what your ideal buyer would look like, maybe you're not ready for one.

Why do I want to sell?

If you always planned to sell the company at some point, then it could be time to cash out and enjoy the money. Maybe you've outgrown the company--the challenge of a startup isn't there anymore and you're bored. You could want more time to yourself, to train for a marathon and coach your daughter's soccer team. Whether it's money, time, or other goals, you need a concrete plan for what your life will look like after the transaction.

When will I be ready to sell?

Even if the company is ready to be sold, are you ready to sell it? Company owners are used to making big decisions about the company's future. Most CEOs do this by focusing on the facts and numbers and then acting decisively. This works when you're deciding which way to grow or direct the company. However, choosing to relinquish control is a much more emotional decision.

Selling a company is a long and time-consuming process. If you're going to start the journey, you owe it to yourself to make sure you're ready to go the distance. You know you are ready when you know: who you want to sell to, why you are selling and that you are truly ready to sell.