Defining Your Priorities

At the outset, it's important for you to sit down and do some serious thinking about what, exactly, you want from the sale.

Do you want an all-cash deal, so that you can wash your hands of the thing? Or would you be willing to finance part of the sales price? Is it important to you that your daughter, for example, remains with the business? Are you looking for a buyer who'll continue your business traditions? Do you want certain tax advantages in exchange for a lower purchase price? Is there some minimum price (say, a round number like one million dollars) that you must get in order to be happy?

If you're thinking of selling because you want to retire, it's a good idea to think about how much money you need to retire on. Then, you can compare that with the value of your business to see whether your plans are realistic, or whether you can afford to be more flexible on terms of the sale.

As with most things in life, you'll have to make some compromises. Rarely does a sale completely meet all of the seller's objectives — or all of the buyer's. The old adage of "your price, my terms" is generally true. If you insist on getting all the money at closing, you'll almost surely have to compromise on price. On the other hand, if you're willing to finance part of the deal, you may get a higher offer. The more flexible you can be on terms, the closer you'll get to realizing the top-dollar value of the business.

As you're reading through this module, you should keep asking yourself what you really need to get from the sale. Eventually you'll be able to come up with a list, in order of priority. When you interview business brokers or mergers and acquisition specialists, give them a copy to see whether they agree with your goals. And keep a copy of your list in front of you as you go through the sometimes frustrating process of negotiating your sales contract.