For many founders, selling the businesses they have worked so hard to build and grow can be a very difficult decision -- after all, you want to make sure the future owners will share your values and work ethic and treat your company and employees with the respect they deserve.
If you're adamant about selling, whether because you need to retire or want to explore other career options, you need to carefully weigh several aspects related to the readiness of the business, market conditions and, of course, potential buyers.
These seven entrepreneurs share some additional best practices for selling a business to ensure not only that you're getting the best deal possible, but also that your organization ends up in the right hands.
Focus on timing with market demand.
"I knew I wanted to sell my past businesses when I sensed there were opportunities and demand in other areas that were of greater interest and had more potential," Calendar founder John Rampton shares.
For the sale to be successful, however, business owners need to make sure it's the right time to sell and check if the market is favorable -- otherwise, it might be better to wait. "When deciding to sell, it's important to focus on timing with market demand for what you currently have and what you may want to offer," Rampton explains.
Sell while you're having fun.
Timing and demand aside, it's important to sell when the business is at the peak if you want to make a nice profit. "Sell when you're having fun and still growing," says Kasey Kaplan, founder of KWK Studio & Quuie, underlining that no business owner's reason to sell should be "because I have to."
"I've been involved in acquiring several companies and once a company is out of cash, has a declining market share and/or is no longer relevant, their chances of getting a good deal are very low," Kaplan explains. "Take the time to set your business up for an exit."
Hire an expert.
"Selling a business can be very tedious and time-consuming," Infobrandz co-founder and CEO Vikas Agrawal adds, explaining that there are multiple liquidation norms, procedures and obligations to comply with when selling.
To help the process run smoothly, founders should hire an expert such as a chartered accountant to handle all the legal aspects. "Hiring an expert will also help you in calculating the right selling price for your business. They are equipped with sound knowledge about the market, goodwill and legal procedures," Agrawal recommends.
Be transparent in everything.
An essential element to keep in mind when selling is to ensure full transparency in processes, documentation, operations and everything else related to the business. This will help establish a relationship of trust between buyer and seller.
"Right from your first conversation through to every piece of documentation, be absolutely clear and transparent with the business you are selling," Nicole Munoz, founder and CEO of Nicole Munoz Consulting, Inc., says. "It can be as difficult to purchase as it is to sell, but having a clear and transparent process is key."
Don't accept the first offer.
According to MonsterInsights co-founder Chris Christoff, business owners ready to sell should try to get more buyers and more offers to consider instead of accepting the first one to "get it over with" sooner.
"Don't accept the first offer, at least right away. You'll find that when you sell your business, there are a ton of people willing and able to take over your company," Christoff explains. Founders should spend some time researching potential buyers and going over their offers before making a decision, he adds.
Consider tax implications.
"Many business owners don't fully consider the tax implications involved in selling their businesses," says Jordan Conrad, founder and publisher of Writing Explained, underlining that the way a sale is structured can carry a hefty price tag resulting in greater tax liability.
"Make sure your accounting firm has tax planning experience or can recommend you to one that does. Don't let poor planning hit you with a surprise tax bill," Conrad advises.
Don't get emotional.
One thing all founders struggle with when selling their life's work is allowing emotion to cloud their judgment, according to David Chen, partner and board member at GTIF Capital. Having been involved in several transactions with his clients, Chen now recommends two best practices for selling a business.
"First of all, find a third-party source that can give a valuation -- this will give you a real idea of what your business is worth," Chen says. "Second, do not get emotional. Emotion creates commotion. Keep in mind that it's a business and you're trying to sell it."