To conclude this series, I’d like to highlight three things every owner should do before attempting to sell – have your business valued; implement a de-risking initiative; and, create a life after ownership plan. Checking these boxes will not only establish a solid foundation for your exit plan but will also enable you to more clearly envision the most logical buyer and position your business accordingly.


First, it’s imperative to understand the value of your business. Many owners think they know what their business is worth, but most have never had it formally appraised. Instead, they rely on gossip from friends and colleagues and articles touting rules of thumb or describing publicly announced transactions. These source typically provide incomplete information that in the best cases is not applicable to the reader and risks being completely false.

When an owner bases valuation expectations on incomplete or incorrect information, he approaches the market inefficiently – ask too much and buyers won’t take him seriously, ask too little and buyers might ask “what’s wrong?” 

A business valuation should be conducted by an independent third party with intimate knowledge of your industry and a history of completing transactions within it. The appraiser should have no bias toward a certain outcome, no formal affiliation with prospective buyers of your company, and the ability to provide you with a well-rounded perspective on all potential transaction scenarios and the underlying valuations of each.

Next, identify any potential challenges to the valuation as well as key contingencies to each potential transaction scenario. Does the valuation align with a lender’s key metrics? Will you have to agree to certain deal terms in order to sell at the high end of the valuation range, and are those terms you’re willing to accept? Are there any aspects of your business that make it unsellable, at any price?


Once you’ve received a valuation, the next step is to evaluate whether or not it makes sense to sell under the various scenarios outlined in the report. We recommend that you meet with a wealth advisor who can evaluate your investment portfolio and income requirements in retirement. When you sell you’ll receive a lump sum payment but are also likely to give up your annual income, if not immediately then after whatever transition or employment term to which you agree. Can you afford this? 

If the answer is yes, it’s now time to evaluate your estate plan. Are you positioned to minimize taxes, protect your heirs, and leave behind the legacy you’d like? Your wealth advisor should be able to conduct a preliminary assessment of your estate plan, and an estate planning attorney can advise on which alternatives are best and draft the necessary documents.

De-risking naturally applies to your business as well. The valuation likely identified several weaknesses in your business, some of which may depress the valuation and others that may cause buyers to decline the opportunity altogether. A strong de-risking plan will help to improve the valuation, improve the terms of any potential sale, and increase the number of buyers willing to meet your valuation expectations.

Life after Ownership

Once you get this far there is still one important question to answer – what are you going to do after you sell? Several studies link the sale of a business and ultimate retirement with deteriorating health. For many business owners, their identity and sense of self-worth are directly linked to their ownership of a business. Once they let the business go, many begin to feel a lack of purpose, which can lead to depression and declining health.

Make sure you have a plan for what you’ll do next, and that this plan involves more than playing golf every day. Identify activities, organizations, or even second career opportunities that can provide a new passion so that you don’t find yourself regretting the sale.

The three steps outlined in this article will help you position your business to be sold to the buyer you deem most logical and position you to exit the business comfortably and happily. If you’d like to learn more about how to apply this advice to your business, please contact us.

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