Wednesday, July 24, 2019

The FIVE MANDATORY Things You Need if You Want to SELL Your Business

By Wayne Rivers
For the Family Business Institute

[Here are] five mandatory things you have to have if you're going to attempt to sell the family business. And this is important because all of us dream one day of exiting the business, and we'd like to do it with a few nickels in our pocket and we'd like to do it while we still have enough health to travel and enjoy life a bit. And we know there are only four ways to dispose of a family business.

You can close the doors and walk away from it; well, we're not going to do that. You can give it to your kids, that's a whole lot less common than it once was. Or you can sell it, and you could sell it in two
ways. You could sell it to insiders, you could sell it outsiders. We all dream of selling the business for big dollars to some outsider...

Every one of those businesses was dependent on one or two or a tiny handful of people for everything. If they were going to buy those businesses, they were actually buying the individuals that ran them, and that's not what they wanted. A buyer wants to buy a business with all the things in place it needs to run, whether the head guy shows up or not. So that's the fatal flaw that kills most family business transactions right there. Number one...

They want to see that you have a unique niche in the market. If you're in the commodity business, providing a commodity service, and let's face it, most of us are, then there's really nothing to distinguish you for a buyer. So, if you're a construction company out there doing hard dollar bid work the way you've been doing it since the '60s or '70s, why would I want to buy your company?

With a little bit of capital, which I have as a buyer, I could just come into town, open an office of my own, and guess what? I can do hard dollar bids just as easily as you can. Same thing with a manufacturer or wholesaler: if you're just in a commodity business and you don't have a unique niche somehow in the marketplace that you can easily identify, then that makes you a lot less valuable to a potential purchaser.

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