Selling a Business Involves More Than Money
THE first time Chris Ludwig sold his refrigerant reprocessing company, he said he acted as if the deal was done long before it was. He beefed up inventory, added sales staff and generally increased his expenses.
But as the buyers delayed, “I got myself in a bad position,” he said, adding, “I said, ‘Let’s hurry up and close.’ I didn’t get near as good a deal as I should have.”
Matt Matich, who ran a trucking distribution company, said he realized during the sale of his business that he and his partner should have consulted a business adviser earlier because they could have expanded the company themselves and sold it for a lot more than they ultimately received.
“We thought of the business as having three legs: you sell, you recruit, you operate,” Mr. Matich said. “We hadn’t looked at the fourth leg, which was finance. Had we had the fourth leg, we would have gone a different route.”
The mistakes people make in selling their businesses stay with them long after the check has cleared and their new life has begun. They may have a considerable financial cushion, but because their wealth came from building something from nothing, they had a deep attachment to the company. It was their livelihood and their path to wealth, but it was also a part of who they were. Not managing the sale as best they could continues to gnaw at some of them.
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For small-business owners seeking to sell in what remains a strong environment for mergers and acquisitions, the lessons learned by those who have gone before them can be instructive.
“Selling a business is not all about the financial side of it,” said Terry Mackin, managing director of mergers and acquisitions at Generational Equity, a business brokerage. “Most are focused on the dollars, initially. They want us to tell them how much their business is worth. But they find there’s an emotional part to this. Eighty percent of the deals I’ve done have not sold for the best dollar offer.”