Many business owners imagine that selling their business is similar to running the baton in a 400-meter relay game: Once they are done running, they can relax. In reality, buyers will insist that you stay for a transition period, six months to five years, during which you will continue to work on your business to help the buyer capitalize on the investment you are making.
THE Question
At some point in the process of selling your business, a prospective buyer will ask you, often casually, "Why do you want to sell your business?"
Buyers ask THE question to assess how likely and willing you are to stay or if you already have one foot out the door. Obviously you don't want to lie, but there is a right and wrong way to answer THE question. Responses like "I want to slow down a bit" or "I want to travel" or "We have a baby on the way and I want to spend more time at home" tell a potential buyer that you plan to disconnect when they take over the business. However, what they want to hear is your intention to support them in discovering the potential that their business has and staying for a prudent or transitional time.
We suggest these answers based on your age:
If you are under 40, you are clearly not ready to 'retire', so you should communicate that you see an advantage in merging your company with theirs: “In order for us to move to the next level, we need to find a partner with more salespeople, distribution, geographic reach, capital, or whatever the partner brings to the table.
If you are between 40 and 55 years old, most people will understand the need to shore up their personal balance sheet: "I have reached a point in my life where I want to create some liquidity from the value I have created so far and, at the same time, I want to find a partner who can help us move to the next level."
If you are over 55, you can start talking about retirement, but you want to make sure you communicate that you still have a lot of energy and passion for your business. “I'm at a stage where I need to start thinking about retirement. There is still a long way to go, but I want to be proactive. "
Rehearse and prepare your answer to THE question so that it becomes a natural response when inevitably a potential acquirer asks, Why do you want to sell your business?
Do you want to sell your business or prepare it for sale? Contact Us.
Source: The Value Builder System