Six Mistakes to Avoid in Selling Your Business

Most entrepreneurs eventually think about selling their businesses, whether as a prelude to retirement or to pursue other activities. In doing so, they often underestimate the effort required for a satisfactory outcome and overestimate the value and saleability of their enterprises. If you're contemplating selling, here are some common mistakes to avoid.  

1. Overestimating the value of your business

Your price should be based on the fair market value of the business in its current form. Buyers won't care about the work you've put into building your business or your unique vision for its future.

2. Failing to account for the nature and make-up of your business

The values of most businesses proceed from a mixture of variables. If your business includes significant equipment, real estate, intellectual property, or other such assets, their values should be separately established before being factored into the overall price. If you're selling a service or professional firm, much of its value may depend on the experience and skills of your managers and employees. In such a case, the price may vary according to the expected retention of key individuals.

3. Failing to base your sale price upon independent appraisals

Even if you think you know the value of your business, you should obtain two or more outside appraisals from professionals familiar with your industry. If the appraisals conflict with your opinion, they'll provide a much-needed reality check. If they confirm your opinion, they'll become a useful sales tool.

4. Not hiring a professional business broker to handle the sale

Owners are often too personally invested  to effectively negotiate sales of their businesses. A broker familiar with your type of business will know what issues are important to buyers and what characteristics to emphasize or de-emphasize, without becoming emotionally involved.

5. Neglecting to work with the buyer to ensure a smooth transition

Nobody likes being thrust into unfamiliar circumstances without preparation. Notifying your managers, employees, and customers in advance and doing all you can to allay their concerns will serve your own best interests, as well as being the honorable thing to do. Discontent on the part of any of the affected parties could result in conflicts, reduced revenue for the buyer, withheld sale payments, and litigation.

6. Being unwilling to help finance the sale

If you're unwilling to take back a note, your sale price is limited to the buyer's cash and ability to obtain outside financing. At best this could limit the number of potential buyers, and at worst it could limit your sale proceeds.   (Conversely, if you finance too much of the sale price, you'll increase the risk of default.)

Selling your business is too important to attempt without professional help. If you're considering selling, call us for an appointment to help formulate your plan.

As life expectancy rises, children increasingly find themselves taking care of elderly parents who are often in deteriorating physical or mental health. This can be stressful, both emotionally and financially. But at least on the financial side there are some things you can do to make it easier.

The first thing to do is to talk to your parents about their financial affairs. This may be difficult. Not only is the topic unpleasant, but most parents are reluctant to share their private affairs, even with their children. But persevere. You need to know the names of their lawyer and accountant and details of their bank accounts and insurance policies. Do they have a will, and if so, where is it? If they're still fit, encourage them to make up a list of the details for you. If not, you'll have to assemble it with their help. But don't delay. A sudden accident or illness could leave them physically or mentally impaired, and you'll have to hunt through their records to find the information.

Once you know their financial picture, you can start to fill in the blanks. At a minimum they should have a will, and you should have a durable power of attorney allowing you to act for them if they are disabled. Encourage them to set up a living will, giving directions for their medical care. Review whether their retirement income and savings are sufficient, especially if they might eventually need nursing home care. Assess whether long-term care insurance makes sense for them. Check out whether Medicare or Medicaid might help.