Q: How do you go about grooming someone to be your replacement?
A: Share a lot of information with them. I advise business owners to open up about the company's operations, the industry it's in, and the financial aspects of running the business. This means that you have to be comfortable sharing private information with your potential successor. Make sure they know what your goals and objectives are for creating value and keeping the company growing. Then, send them to training programs, industry conventions, and educational opportunities so you can help equip them for the job. You also have to offer financial incentives to these people and help them develop personally so they will measure up to your expectations in the long run.

Q: What if you find that you cannot or do not want to sell to an insider or family member?
A: You start by putting together an advisory team of professionals. You will need a business broker or an investment banker acting as a third-party intermediary. This person puts together a marketing book and a list of potential buyers, then sifts through the list to find qualified buyers. The best scenario is a controlled auction with several potential buyers. That drives the process through to the best offer, with the most cash and the fewest obstacles to sale.

Even if there is one big player interested in your company, I advise business owners not go to the dance with him alone. Bring in some competition, because you can usually get more money if you wait and you orchestrate. The best scenarios is to create a "fear of loss" in the potential buyer, so they'll think one of their biggest competitors is going to buy your company. That way, they'll sweeten the deal and make it easier for you to sell.

Q: What about the emotional part of the process that you mentioned early?
A: That's definitely part of it. I tell clients that this is the most emotional business decision they'll ever face. But they can't remain emotional and undecided forever or they'll never get the deal done. You must be 150% sure you are going to sell before you start the process, because if you stick your toe in the water and then pull back, your employees, clients, vendors and everyone else will be all shook up.

Believe it or not, the average age of a successful seller is 45! Once a business owner gets into his 60s or 70s, he'll talk about selling, but many times he won't be able to pull the trigger. And the longer you put it off, the harder it is to do. I get older people who start the sales process and then walk away from deals because they are scared to death that they won't know what to do with themselves if they don't go into the office every morning. To me, that's sad. When I help a younger entrepreneur who can sell for a great price and still have 30 or 40 years of good health and good life in front of them, that's the best-case scenario.

| 1 | 2 |  <<previous page