Advisors Offer Tips for Avoiding Major Pitfalls When Selling a Firm

Advisors Offer Tips for Avoiding Major Pitfalls When Selling a Firm

Selling a business or having it change hands among family members is a common occurrence among kitchen and bath dealers.

However, there are a number of major pitfalls in selling that should be avoided at all costs, business advisors say. Among them are these:

  • Continue to mind the store and keep a close eye on everyday business during the negotiating process, which may take six months or more.
  • Stay focused. Have clearly-defined objectives, and be prepared, decisive and confident.
  • Involve advisors and objective, experienced third parties.
  • Keep your emotions in check, remembering that selling a business is like riding a roller coaster. There will be a lot of ups and downs.
  • Don't worry about what someone else received for his or her business. Concentrate, instead, on the sale of your own business. Remember, too, that the highest "bid" may not be the best deal. All aspects of the transaction must be examined.
  • Take your time; don't be in a hurry.
  • Share good news and bad news about the business. Don't hide anything.
  • Set your expectations realistically, so you won't be hurt or disappointed if you don't get what you want. Often, businesses are sold, or otherwise passed along, to family members who've been associated with the company in some capacity. The following are steps for ensuring a smooth family business succession:
  • You must have motivated and knowledgeable successors.
  • You must have an organized team of managers.
  • Develop a group of competent advisors.
  • Develop a straightforward ownership structure.
  • Be sure you have full and open communications among family members.
  • Consider an outside Board of Directors.
  • Be sure the seller has a meaningful retirement plan.
  • Do careful estate planning well in advance.
  • Solicit outside help in determining a fair value for the business.

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