5 Ways to Sell Your Business in Plano, TX
If you’re considering selling your small business, you’ve probably already come across lots of different “advice” on how to go about selling it best. The truth is, there are many different ways to sell a business; however, not all of these strategies have the same merit or effectiveness. To help clear things up, we are going to walk you through the five different ways you could consider selling your business and evaluate the different disadvantages and advantages of each.
Depending the market your business is located can affect the ways you can sell your business but today we will focus on Plano, Texas. Let’s dive in!
The first strategy you might think about using when selling your business is a do-it-yourself one. In fact, most business owners choose to go the DIY route. Unfortunately, there are a few different issues that can and often arise with this approach. First, it’s incredibly difficult to protect confidentiality when you’re selling your business yourself—and maintaining the right level of confidentiality is almost always key to a successful sale.
Secondly, it’s almost impossible to value your business accurately when you’re not using a market approach. You might have come across other ways to value your business, but the market approach is the correct one when you’re actually looking to sell your company—and you won’t be able to determine that on your own.
The third problem with the DIY strategy is that you don’t get access to the expertise or experience needed to handle the intricate details of selling a business.
Many business owners naively assume that the hardest part of selling a business is finding a buyer. But finding a buyer is actually one of the easiest parts. Our database at Sigma Mergers & Acquisitions has over 10,000 active buyers looking for businesses. There are many, many buyers out there; finding them is not the hard part. The actual difficult part of selling a business is understanding the different details and processes that go into a successful sale. For example, take the concept of working capital. Working capital when you’re selling your business is calculated differently than how your CPA does it standardly. How you end up calculating that number during your business sale can mean the difference between tens or even hundreds of thousands of dollars in your pocket.
There are a countless number of details and nuances like this that are unique to the process of selling a business. Taking on the DIY approach will mean missing out on these critical insights and expertise. Selling your business on your own is possible in the Plano area but this comes with some obstacles that can easily be avoided.
2. Having Your CPA Help You
Another way to go about selling your business is having your CPA help you with the sale. It’s easy to see why people might think this would be a good strategy: there’s a lot of financial aspects that go into selling a business, and CPAs know a lot about finances. In a market like Plano, Texas CPA’s will come across as confident they can get the job done but the problem with this line of thinking is that the vast majority of CPAs are not trained to actually sell your business. Your CPA might understand the operational side of your business finances, but they probably don’t know how market-based valuations work or even have access to the right sort of databases that are needed to determine those valuations.
Even if your CPA has taken a seminar on business sales or business valuations, it’s still not something that they do every day or are even fully trained in. When selling your business, you’re going to want to work with someone who has significant experience in helping business owners sell their companies. Take the working capital example we talked about earlier. A CPA’s definition of working capital is current assets minus current liabilities. However, current assets minus current liabilities is not the way you calculate working capital when you go to sell a business. When it comes to business sales, working capital is calculated from a gap perspective—but your CPA might not know that. You could potentially be leaving hundreds of thousands of dollars on the table if you or your CPA calculates that number incorrectly.
Make sure when you’re selling your business that you’re not using a CPA that has no experience in valuations, no access to databases that can help you value your company, or does not understand the details of business sales in general.
3. Through Your Attorney
The third way you can try to sell your business is with your attorney. It’s true that there’s a legal aspect to selling a business that requires an attorney. However, not all attorneys are trained in or have experience in business sales. Because attorneys charge by the hour and business sales often take hundreds of hours of work, you can easily end up wasting money on an attorney that is used to dealing with lawsuits and contracts rather than business transactions.
The other thing to be aware of when working solely with an attorney is that they can sometimes end up being an unintentional obstacle to achieving a successful sale. When helping you navigate the sales process, it’s very common for attorneys to be set on getting you 100% of what you’re looking for when you go to sell your business. The problem with this is that the best business transactions happen when neither side is getting “more” than the other—it should be fair for both the seller and the buyer. But attorneys too often kill deals or might advise you not to take one because it’s not 100% in your favor, even though it might actually be the best deal for you, your employees, your vendors, your customers, etc.
4. Hiring a Bad or Inexperienced Business Broker
When you make the decision to sell your business, you might come across dozens of different business brokers each trying to convince you that they can help you achieve a successful sale. The problem with this strategy is that the number of inexperienced and, frankly, bad business brokers out there far outweighs the number of experienced ones.
Too often there are business brokers that just do business brokerage on the side to try to earn some extra income. The only thing motivating them to help you sell your business is the chance of making a commission. What ends up happening, then, is that these inexperienced brokers place their entire focus on making that commission instead of educating you on how the process of selling a business works and how they can help you achieve the best possible outcome for yourself, your family, your employees, and your customers. It’s also possible to come across business brokers that only sell businesses in one particular niche or industry. And if that industry is the same as yours, we can see how at first that might be appealing. The problem with this narrowed focus is that these brokers end up operating in a vacuum and because their experience doesn’t expand beyond that specific niche, they often can’t get you the highest value for your sale.
Something else to be aware of when working with business brokers is whether they charge you upfront fees. Too many bad business brokers try to charge you tens of thousands of dollars just to list your business without ever proving to you their track record of success. In fact, there are business brokerage companies that charge high fees upfront simply to package your business and get it ready to go to market—without ever helping you to actually bring about a successful sale. The worst kinds of business brokers essentially scam business owners by charging fees upfront with nothing to ultimately show for it.
5. Partnering with an Experienced Business Mergers & Acquisition Firm
At this point you’re probably thinking: Well, if there are inexperienced business brokers out there, are there also experienced ones? The answer is yes—and working with these experienced professionals is actually the best strategy for selling your business. Professional business brokers, and particularly professional mergers and acquisition firms can guide you through the entire sales process so that you can get the best value for your business. A professional business broker makes all the difference in the world in business transactions because they have the expertise, database, and industry knowledge needed for a successful sale.
At Sigma Mergers & Acquisitions, not only can we help you value your business accurately and confidentiality, but we also have a marketing staff that is committed to positioning your company in a way that highlights how it’s different from its competitors. If you’re looking to sell your business, take a moment to reflect on all of the blood, sweat, and tears that you put into building it—don’t you think it’s worth partnering with someone who has the experience to get you the highest value for all your hard work?
If you’re interested in learning more about how our team can help you sell your business in a way that minimizes headaches and maximizes value, contact us today.