Process of Buying and Selling a Business
January 06, 2024
by an intermediary from Gonzaga University in Tacoma, WA, USA
Selling a business is a multifaceted journey, intricately entwined with the emotional fabric of business owners who often traverse this path just once in their lifetime. Devin Craig, a seasoned business broker, sheds light on the intricate psychological dance that accompanies the sale of a business, drawing parallels with the nuanced work of marriage and family therapists, particularly his wife.
At the forefront of this intricate dance lies the pivotal factor of motivation. Craig underscores the significance of business owners assessing their readiness to bid farewell to the enterprise that has not only served as their bread and butter but has also woven the financial tapestry of their families and provided a livelihood for dedicated employees. This motivation becomes the guiding force to navigate the labyrinthine, time-consuming, and emotionally taxing process that unfolds when one decides to part ways with their business.
Fear, Craig emphasizes, should not act as an impediment but rather as a prompt for business owners to delve into the profound emotional connection they have with their ventures. The fear of parting with one's "baby" – a term he affectionately uses to describe businesses – is a common thread among business owners, especially those steering smaller and mid-sized enterprises. This acknowledgment becomes a crucial facet in understanding the psyche of those undertaking the endeavor of selling their businesses.
Motivation then becomes the bedrock upon which the entire process is built. Craig articulates the necessity for business owners to recognize their own entrepreneurial call, a decision often fueled by a desire to break free from the corporate grind that, while secure, breeds boredom and burnout. This introspection unveils the psychology intertwined with the business buying and selling landscape – a domain where Craig believes he shares common ground with his wife, given their daily engagements in discussions around emotions.
The core of the process then beckons – the intricate journey of selling a business. Craig unveils the critical first step: a thorough valuation. He advocates for business owners to regularly assess their businesses' worth, ideally with the assistance of a proficient intermediary. This valuation, Craig asserts, is not just a numerical exercise but a strategic move to set realistic expectations and allure potential buyers into the intricate tapestry of the business.
Choosing an intermediary becomes the next pivotal step, and Craig advocates for aligning with someone who possesses not only expertise but a clear understanding of market dynamics. The intermediary serves as a guiding force, orchestrating the internal and external marketing efforts to attract potential buyers. Business owners, in turn, are implored to be prepared to answer a barrage of questions, providing a transparent view of their business operations and opportunities for improvement.
As offers start pouring in, Craig advises against hastily dismissing the initial offers, advocating instead for a dialogue with potential buyers during the due diligence process. This phase, he stresses, requires an intermediary adept at handling complexities, ensuring a smooth transition through the labyrinth of due diligence and financing.
Financing, a critical juncture, involves quarterbacking the buyer through securing financial backing, often from banks. Brokers play a pivotal role, navigating communication channels, ensuring all required documents are furnished, and facilitating a seamless progression through the deal.
The legal aspect unfolds with the drafting of an Asset Purchase Agreement (APA), a document that demands precision and fairness. Craig suggests involving a neutral third-party attorney to steer the process toward equitable representation. The legal closing marks the culmination of this intricate dance, paving the way for a transitionary period wherein the buyer assumes control.
In essence, Craig paints a vivid picture of selling a business as an elaborate, detail-laden journey. He urges business owners not to shy away from seeking professional guidance and, with the right support, assures them that navigating the complexities of selling or buying a business can indeed be a triumphant endeavor.
from University of New Haven in Cromwell, CT, USA
from University of New Haven in Cromwell, CT, USA