How to Prepare to Sell Your Business, Stay on After the Sale, and Take Back Your Business When Things go Wrong
Selling your business can be very stressful. When considering selling, you need to think about not just the legal and financial aspects of a sale but also how it will affect you emotionally. After letting go of something you worked so hard to make successful, you may feel depressed, discouraged, or dissatisfied.
What is Your New Role?
Often new owners will want to keep you on to run things until they get the hang of it. However, in other cases, your role may be dissolved with the sale, and you will be left on the sidelines. You need to prepare yourself mentally for whatever may happen after signing the paperwork. Often company owners are devastated by watching the new owner come in and destroy their "baby." It's critical to accept your new role fully and be okay with however things change.
Where is All the Money?
Most business sales do not end with you receiving a lump sum payment. The buyer may choose to obtain funding with a bank, or you as the seller may finance the deal. Even though you will get your money over time, by financing the seller, you get to "sweeten the pot" by charging an interest rate that is higher than a traditional bank.
Be very careful when deciding whether to finance, as the buyer may end up defaulting on the loan forcing you to foreclose and take back your company. If you do, it may not look like the same business you sold. If you choose to finance, be sure you have a contingency where you can monitor business operations and look for warning signs to take quick action to protect the company's value before it's too late.
Why You Need a Good Attorney
Small business owners may or may not use an attorney to help assist with business transactions. However, do not sell your business without the help of an experienced business attorney. They can help protect your interests for the long run and advise you of your rights and remedies upon default.
The Bottom Line
The decision to sell is a personal one, and you must think long and hard before deciding what is right for you. Take note of any pressure to sell; it may be a red flag indicating the buyer's potential financial situation. If the sale benefits both you and the buyer equally, it may make sense. Be sure to protect yourself by ensuring you will get paid and the business will be managed correctly until the note is paid off.