Selling Your Small Business: Pay Attention to the Emotional Issues

By Rich Madzel



Selling your small business can be a very exciting time. Most owners of small businesses dream of the day when they will sell it and live happily ever after on the proceeds. Usually, they spend considerable effort and time preparing for the sale by cleaning up the books, making the place look better physically, etc. Basically, they follow a to-do list of tasks designed to prepare the company, bring it market, find a buyer and close the deal.

Unfortunately, what most of them don't do, or at least don't do as effectively as they should, is prepare for the stressful and emotional aspects of the sale. Selling the business the owner spent time growing and nurturing can provide a significant emotional impact.



What Is a Good Offer?

When you get an offer, you can never be sure if it is the "best" offer possible. In fact, there is always the possibility of a better one coming along in the future, but you have to deal with the one(s) you have right now.

How much is being offered, and in what form - cash, you carry the paper, earn-out? Will you really get paid? When? What is the net after taxes and paying off debt? Many questions are hidden in the offer price. Will this deal even close? Trying to answer all of them is crucial in determining if it is a "good" offer - one you should accept.

Needless to say, these questions present a very stressful situation, especially if you have not anticipated this period.



What About My Employees?

Many small business owners really care about their employees. Most also care about their vendors and customers. They wonder: "What will happen to them after I am gone? Will the new owner look after them the way I do?"

There is no way to know for sure how this will play out in the future. However, if your goal is to do the best you can for your employees, build some controls into the sale agreement.

Maybe the employee will get a bonus if he is terminated by the new owner. Maybe you pay the employee a bonus if she stays, since she may be an important part of what makes the sale successful. Those are financial issues, but realize they do not cover how the remaining employees will be treated on a daily basis.

And as for your vendors and customers? You have little control as to their future.

An interesting point to consider is that, while you believe you have done well by your employees, they may not feel that way. Further, the new owner may decide he needs them and will end up treating them better than you did.

However, the reality is that you are going away, and they have to accept that fact and figure out how to live with it.



Deal Will Crash Three Times

This will make you nervous if you don't see it coming. Almost all sales of small businesses fall apart three times during the selling process before they actually come to a happy conclusion. Don't get too upset when it happens; just know that it will, and work through the issues.

The most interesting of the three crashes is the one at the closing table when the other guy's CPA or attorney comes up with a bizarre point designed to make himself look good to his client. These folks can't help it as it is in their DNA. Here you sit, anticipating what you have dreamed of for years, and someone wants to renegotiate what amounts to lunch money. Count the Benjamins, not the Georges.



What Will I Do on Monday Morning?

A wise man's daughter - a man who was selling his business - once said some very important words to her father. Here is what she said.

"Now, Daddy, on Friday you will sell the business. Congratulations. On Monday you will have a lot of money in the bank, and you'll be celebrating your freedom but looking for something to do.

"If somebody asks what you do for a living, no more can you say: 'I own my own business,' for now you are unemployed.

"Tuesday, you will start lining up the spice jars in the kitchen cabinet in alphabetical order.

"Wednesday, it will be in size order.

"By Friday, you will be sleeping in the garage.

"Daddy, do you get my point?"

The wise man got the point, and it is a major one to anticipate. It is probably the most important point to consider when selling your business.

Think ahead before you decide to sell, and have a plan as to what you will do in your future. A short time off from work may be welcome, but you are used to working long hours and being intensely involved. Sitting home watching the stock market ticker run across the bottom of the screen will make you crazy. And you are not going to play nearly as much golf as you think you will.

Have a plan for what you will do, how you will spend your time, and what you will do with the money from the sale. Be assured, the time off is nice, but it can quickly get boring, and there is little doubt the money from the sale will get spent faster than you expected.

If, in fact, you are prepared to start another business or already have, good for you.



Rich Madzel, of Business Match, can be reached at 443-745-0332 or 410-964-3353. He is the author of How to Sell Your Small Business: Sell your small business the way experts sell a big business. He is currently seeking contributors for his next book, Guys' Recipes for Guys: Guaranteed to Improve Your Love Life.