Selling Your Business: Should You or Shouldn't You?

A time comes in every business life cycle when an owner considers selling his or her company. It is not a simple decision.

“One of the biggest risks is selling before you are ready,” said Robert P. Smyth, a Johns, Flaherty & Collins attorney. “The last thing you want to do is turn a business over to someone else before its cycle in your life is complete. If you aren’t really ready, it can lead to seller’s remorse.”

It helps to understand your reasons for selling. Is it because of your age and/or health, or is it because you want another career or are burning out?

He urges business owners to think about their lives after the sale. “Do you want to start another company, work for another company or completely retire? If your company is an extension of yourself, it may be an especially difficult decision to sell it,” Smyth said.

Also he advises considering whether you want a formal relationship with your old business after the sale, maybe as a consultant so you have less responsibility or decision-making. “Some find this too difficult if the new owner takes what you created into a new direction,” Smyth said. Before that time, consider whether you are comfortable with a prospective owner, particularly if you trust this person to continue the good will that you created.

Other issues include timing, particularly in a recession; if the business is sellable and what it is worth; and the impact on your income and taxes.

You may be able to consider many of these issues yourself, but expert assistance may be needed for more technical concerns, such as tax impact, timing and the value of your business.

“As with any major business decision, it’s a good idea to consult with your accountant, attorney, banker and insurance agent,” Smyth said. “They can help you decide if this is the right time to sell.”