What to Expect When Selling Your Business

There are a lot of decisions and steps involved in selling your business, both on a logistical and emotional spectrum. The more perspective and preparation you have going into the process, the more smoothly the process will go toward an exit you’re proud of.  

In this post, we’re going to explore the key aspects of the process and what you should consider to ensure your needs and expectations around selling your business can be met. 

Step1: Determine How Ready Your Business Is To Be Sold

There are many factors that go into determine how “ready” your business is to be transferred to another owner. Transferability refers to the readiness and ease at which you, as the owner, can no longer be involved in the business without impacting the business’ short and long-term success.

For a more comprehensive list of the factors that allow you to increase the value of your business, read this article describing [How To Increase The Value Of Your Business].

High transferability goes a long way when placing a value on your business but it is not the only factor that matters in a sale, especially with Four Pillars.

Many private equity firms or private buyers look at businesses in very transactional ways, trying to determine where they can trim expenses and personnel. That’s not Four Pillars.

Our interest in businesses like yours is to ensure a timely, responsible transfer of ownership to learn from the best and help drive growth with the right partners.

What you can expect:

Understanding the strengths and weaknesses of your business today is the best way to build a plan to where you want the business to be. It’s also important to remember that there are a lot of ways to improve your business’ readiness to be sold.

Step 2: Determine How Ready You Are To Sell Your Business

One of the biggest factors that will impact the final sale of your business will be determining how you want to exit your business personally. The following are factors that might be considered:

• Your exit timeline: how soon do you want to sell your business?

• Your level of involvement: how involved in the business do you want to be post-sale?

• Your business legacy: how important is preserving your business’ culture to you once you’re no longer involved?

Increasing the value of your business is of the utmost priority on the logistical side, but reflecting on the other aspects of your life that are impacted by this event are not to be overlooked.

In some cases, owners are exhausted entirely and just want to walk away. In other cases, there are certain aspects of the day they don’t enjoy but would love to stay involved to work on the activities they do enjoy. Our view is that having the tribal business knowledge can be invaluable to new ownership.

What you can expect:

Your role with the business post-sale should be a central part of the conversations around the sale, whether you want to walk away entirely or play a pivotal role, whatever that ideal role may be.

Step 3: Determine Who the Best Buyer Is –

Here Are The Benefits Of Selling Your Company to a Private Equity Group

There are two parts to this question:

1. What type of buyer do you want to sell to?

2. How do you determine which buyer is the best fit for you?

There are many options when it comes to considering how to transfer your business to a new owner, however, selling to a private equity firm can be an efficient and secure way to exit your company.

Why?

A private equity firm has been through this process numerous times so there’s a tendency to be able to complete the deals faster.

Other options take longer or are riskier. For example, selling to a larger competitor in the same industry might have some appeal, but what happens if the deal falls apart? A great deal of highly confidential information will have been shared with this competitor. That obviously is not a desirable situation.

Not all private equity firms are the same. Our preference, though, is for the buyer to have the desire to help take the business to the next level. That requires an ongoing commitment post-close but we have shown some success in creating roles that are attractive to the seller.

What you can expect:

Step 4: Begin The Actual Selling Process

Here’s How That Looks With Four Pillars Investors

Let’s say you identify a potential buyer to purchase your company. What happens next? We cannot speak to what the process would be like for any potential buyer but here is an overview of what you can expect from selling your business to Four Pillars:

1. An introductory phone call, where we discuss your company’s history, what your plans are regarding ownership and management, and what you would like the business to achieve in the future.

2. If the introductory call doesn’t reveal any reasons for us not to continue to explore an opportunity together, we schedule a discussion on the general structure of your business, and what makes it successful. We will be curious to know your strengths and where growth opportunities exist. It’ll also be important for us to understand what you, as an owner, want to achieve for yourself through your business, and what your vision is.

3. If all goes well, we would then visit your business so that we can meet in person and we can witness your operations, company culture, and day-to-day functions. We will make every effort to not stand out, nor would we even consider interacting with employees.

4. The next step would be draft a letter of intent (LOI) with you, in order to solidify our common interests in a more formal way and outline the next steps of the process.

5. As we begin to align on the details of our agreement together, the documentation needed for the sale is drafted, collected, and organized, and we prepare for the final step: the closure.
   
   At Four Pillars, this final step in the transaction is the first step of the transition. Our main focus is to grow businesses we buy, so we prefer to have the previous owner as part of the team in some capacity if you so choose. 

How Long Does the Selling Process Take?

Selling your business to a private equity company involves a commitment by both parties to align with one another and share the appropriate information in a timely manner. To this end, the selling process can last a few months (typically there’s a minimum of 3-4 months) up to a year or more.

This timeline depends a lot on how ready you are to make the exit, how complex the assessment process is, and how quickly an agreement is found on the roles and finances. We aim to close in 3-4 months so if it takes longer than that, there is typically a desire on the part of the seller to slow the process.

If you are starting to consider an exit option, as a business owner, let’s connect and explore the options and prospects you have by selling part or all of your business to us. We are eager to present to you the resources we can bring, and what we aim to achieve from a partnership with you. Contact us to start the process and find out much more.