The Trials and Tribulations of Selling a Business

Whether described as a tsunami of sellers, the coming "Baby Boomer bust" or other names, many private company owners are in sell mode, whether they know it or not.

However, many don't know it, while others are too involved with the "here and now," fearful of addressing the notion of exiting their business. Finally some owners are resigned to ride their business into the sunset.

The goal for this column is to provide a forum of ideas and strategies to assist in the exit process. To that end, we will interview business owners who have exited their businesses, professionals who advise business owners on sale or transition issues, and others to provide an overview of the exit process from a financial, family and emotional perspective.

By way of introduction, I have been a practicing CPA for over 30 years, and my partner, John Salemi, and I, after considering the competitive environment for CPA firms in 2014, decided to put ourselves "in play." Fast-forward two years and we successfully negotiated a sale to UHY Advisors N.E. LLC, a national CPA firm.

Our journey was not by any means a fast transition and probably not much different than what is experienced by many business owners who are exiting their business.

Here are some of the questions we had during the process and the issues we encountered:

Fear of the unknown, what if … ?

Our first concerns were: What if our team members find out we are trying to sell the business? Will they leave? What if our customers find out? Will they leave? What type of firm should we look for? Should we seek a firm smaller in size, our size or a larger firm? What do we have to sell?

Potential loss of freedom

Except in a scenario where we would be acquiring a smaller firm, what would our firm look like after a transaction? What would our roles be? How can we be sure that "cultures" match?

It took longer than expected

Our initial foray into the market revealed a clear preference for us — a larger firm would offer a better platform upon which to grow, increase capabilities and provide a means of succession. The initial interview and get-to-know-you process went smoothly. In fact, in hindsight, too smooth.

As we delved into the negotiations, we realized that we missed communicating in a meaningful way with two very important constituents in the process — our wives. Yes, they were supportive, but we realized very quickly that if this process was to be successful we needed "buy-in."

The entire process took two years to complete. We learned that it takes time to consummate a deal and many roadblocks will appear whether anticipated or not.

While we thought we were ready, we really did not have our “ducks in a row”

Once the letter of intent was signed we found ourselves in a position where we needed to get information to the buyer as quickly as possible as part of the due-diligence process. We quickly realized we needed to get the buyer data and information in the form they wanted, not what we used as metrics.

No succession in place

We had been very successful in attracting a team of professionals that worked together harmoniously, but based on their career paths and personal needs we felt we did not have any likely successor(s).

We had no idea what our business was worth

This may sound heretical for a CPA firm not to know their worth or value. But the important point is you do not know your value unless you begin the process of marketing your business to buyers. While we could have an educated guess at the value, it was only by going through the sales process that we found our true market value.

The above recounts our experience in the exit process. We welcome business owners, advisors and others to share their experiences with us and HBJ's readers as we embark on a journey of discovery.

This article was originally published by The Hartford Business Journal.

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