Going Once! Going Twice! The Art of Selling Your Business

By Jeff Lever

Underestimating the importance of the preliminary planning process can cause major headaches down the road for individuals who take initial preparations for granted. The “shoulda-woulda-coulda” scenario can be easily avoided if the business owner takes the necessary steps in preparing their business for sale. Envisioning the entire sales process before implementation will properly prepare you to avoid snares along the road and enable you to more efficiently handle them should they occur.

What exactly should this vision include? Breaking the concept down to its core elements will tell the teleservices call center owner what to look out for. These elements include preparing the business for sale, the negotiating process, selling procedures, and post sale concerns. With all of these in mind, owners, and in many cases, a team of hired professionals, will create a road map from start to finish forming the ideal path the business owner would like to take in selling the business.

Preparing to Sell: Preparations for selling a teleservice company can include up to five years of preparation. Most call centers don’t take that long to prepare and can simply make their way to the block in a few months. The process includes considering the reasoning behind selling, financial preparations, real property, equipment, personnel decisions, and strategy considerations, confidentiality deliberations, professional team assembly, clientele considerations, and market targeting. There are many more items involved in preparing a teleservice call center for the market – each of which will take considerable time and effort to bring the maximum price for the business.

The Decision to Sell: Why are you selling? The number of reasons are infinite, but in many cases, you can narrow it down to a few selections – retirement, capital relocation, and family. The decision for selling you choose to convey to your potential buyers is one of the most crucial decisions you will make when selling your business. Some reasons for selling will bring quick offers, but in most cases they will be made by bargain hunters looking for a quick deal. On the other hand, different reasons will get you more serious offerings and may be much closer to your asking price than the original reason. Remember, the reason for selling will not only affect the asking price, but also the duration of the sales process.

After the Decision to Sell: Once an owner has made the decision to sell, financial considerations and preparations will need to be made. What type of offer are you willing to take? Only straight cash? If you are willing to provide owner financing, at what rate? Just as your reason for selling can have an impact on the sales price, these financial questions can answer you with a higher or lower sale price.

One reason it can take so long to sell a business is preparing the financial documents. Owners enjoy many tax benefits in running a business. What you save in taxes, you will lose in purchase price as certain “fluff” spending is often debated across the negotiating table as to its legitimacy to the business. It is important to minimize nonessential expenses and maximize profits. While the government will get its share, you’ll get a higher purchase price in the end.

Professional teams are often made up of some or all of the following: brokers, merger and acquisition lawyers (ensure they have done mergers or acquisitions in the past), financial accountants, and tax accountants. Not all are essential, but they do help the process flow much more smoothly. Each is responsible for essential elements of the sales process and each shares some similarities between their individual responsibilities. The most essential similarity is their loyalty to you. There have been instances in the past where a trusted lawyer, who has worked for the company for years, has intentionally botched deals during the legal process to delay or kill the negotiating process – simply for the sake of not loosing a valuable client. This is just one of the considerations to be aware of when assembling your professional team.

Final Preparations Before the Sale: If you have decided to hire a skilled professional team, they will be able to assist you in preparing your real property, equipment, and personnel strategies. Many times, when meeting with your team, you want to assure that your staff are not alerted to their presence. It is better to carry out phone conversations off site. If members of your team meet with you at your site, tell your staff that you are expecting a consultant(s). Your team should also be able to instruct you in the realm of confidentiality (both inside the company and with potential buyers) prior to your first on site meeting. The last thing a business owner wants is for their staff to start searching for jobs when it could take months to sell the business.

There are also clientele considerations when selling your business. For instance, customers will sometimes select certain teleservice companies based on their locality. If you are selling your accounts to a company that is not a local company and customers discover this, they could leave the business. This is relevant because many buyers will structure deals to prevent account loss. In other words, if they loose X number of accounts during transition, you loose X number of dollars from the escrow account check. Don’t be offended if a buyer asks for these types of terms during the negotiation process, because it gives you an opportunity to ask for something in return — a higher purchase price!

The last aspect to prepare before officially putting your company on the block is whom to target? A common misnomer is to go to a competitor. They may appear interested, but may only do so to get you to release confidential information about billing and other sensitive material that could give them a competitive advantage. Often, strategic buyers will pay more for your company than those looking only at financial aspects. This presents a challenge as they are the most difficult to find! A delicate line between confidentiality and marketing must be walked in order to assure the maximum asking price for your business.

Jeff Lever can be reached at 704-287-9990.

[From Connection Magazine – Jul/Aug 2006]