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July 2013
Should I Sell My Business Now? Why Owners Choose Not to Sell
By Robert Norris

     If you simply are not emotionally ready to sell, if there is still fire in your belly—enough fire to fuel your continued investment in the company—or if you ultimately want to leave the business to family members or employees, then you may not be in a position to sell your business—yet. If you and the business are ready to sell, but you still hesitate, let’s look at typical reasons for that hesitation and what you may be able to do about it.

     The premise of this article is that owners typically don’t sell when they should because they procrastinate, or they fear the unknown and, perhaps more specifically, they fear losing the known.

     Procrastination on the part of an owner is not uncommon and can arise for one of several reasons. First, some owners just don’t know where or how to start planning an exit. If you are one of those owners, then reading the remainder of this article is a good start. The next step is to contact an exit planning professional to begin the process of creating an exit plan that allows you to cash out of your business and maximize your after tax proceeds when you are ready to do so.

     Second, some owners think that they can sell later, but as we have been discussing, when most baby boomers reach retirement age, the glut of companies in the marketplace is projected to drive prices down. There will be many more sellers than buyers; hence, a buyer’s market. Further, the merger and acquisition cycle can have a huge effect on the sale price of a company.

     In the third group of procrastinating owners are those who believe that because they have “good” businesses, the process will take care of itself. When they think about selling, they simply assume that there isn’t much for them to do. They believe that when the time is right, the right buyer will appear and pay them a great price for their company.

     It does happen, though quite rarely, that the right buyer appears and pays a great price for a great company. However, it can be much better to prepare for the biggest financial transaction of your life, instead of leaving the success of your business exit to the luck of the draw.

     In our experience, the owners who suffer from the fear of the unknown usually hold one (or more) of the following opinions:

 

·      “I don’t think the business is worth enough to satisfy my financial needs and objectives during retirement.”

·      “If the employees discover I’m trying to sell, they will all quit and I will have nothing to sell.”

·      “Because I’m indispensable to the company (the company can’t run without me), I’ll be required to work years for a new owner and I don’t like working for anyone!”

·      “The sale process will take too long and cost too much.”

 

On the other hand, the fear of losing the known is usually based on the following:

 

·      “The business has been my life—or at least it has given my life a great deal of meaning and focus; without it I may feel lost.”

·      “The government will take too much in taxes—it’s easier, less risky and more lucrative to stay, enjoy the cash flow and then leave getting paid over time.”

·      “What will I do after I sell and leave the business? I don’t know what my life will look like if I leave.”

 

     If one of these concerns resonates with you, then the time may be now to squarely assess these concerns. Your burdens can be greatly eased if you seek out an exit planning professional with substantial experience in assisting business owners in creating a customized exit plan which meets their personal and business objectives.

     That professional can help you identify which concerns may be truly “real” and which ones may be easily resolved. Also, he or she can help guide you through the process of reviewing all of the factors associated with exiting your business—along with various options to consider—leading to a comprehensive exit plan that can help you remove the common roadblocks and take appropriate action now to meet your objectives.

Robert Norris is managing partner at Wishart, Norris, Henninger & Pittman, P.A.
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