With the planned sale of your business, your reason for selling will be one of the most important “trust factors” created to reach agreement with a potential buyer. Selling your business to an outside buyer begins with a courtship. Don’t ask to get married on the first date, and never, ever lie about why you want to get to know them better! These exit options are the most common reasons for selling a business to a third party, listed in order of highest credibility:
This is THE very best reason for selling! If you are of retirement age, a buyer will more readily accept that you are selling so you can start enjoying the next phase of your life- not just hiding from problems in the business such as the loss of a customer or key employee.
Health issues are another legitimate reason to sell. You don’t have to divulge all of the details of your personal health situation, but the more forthcoming you are, the greater likelihood that the buyer will believe your reason for your selling along with other critical aspects of the sale.
Death of an owner or partner is a very unfortunate but legitimate reason for a sale.
Divorce / Partner Disputes
Divorce and/or partnership disputes are also legitimate reasons for a sale as long as they legitimately affect your ability to operate the business. If you site this as your reason for sale, make sure you have a good story to tell (and don’t mind telling it).
Loss of Market Share
Be honest about declining sales, because in a challenging economy, you can! Be forthcoming with information, share the down and dirty details and be prepared to present the plan to help the new buyer grow again as the economy rebounds. Also, be prepared to participate in the financing (promissory note or an earnout) to reap the upside benefits (more on promissory notes and earnouts later).
So to recap, make sure your reason for selling is legitimate and your “selling story” is practiced. Answering the “reason for selling question” honestly and convincingly will set the stage for an open and friction-free negotiation.
The above is an excerpt from the soon to be released book “EXIT! 12 Steps to Sell Your Business for the Price You Deserve” by Julie Gordon White. Julie is a Certified Business Broker, Author, Speaker, Wife, Mom and Marathoner. Julie lives in the San Francisco Bay area and has been quoted in major media outlets such as the New York Times, Wall Street Journal, Inc. Magazine and the San Francisco Chronicle.