Develop your goals and define your company’s sales plan


Week 1: Pre-planning: Developing your goals and defining your game plan

For many, the mere thought of selling their business is difficult. It could be, for example, that your business has been in the family for generations, or that you have invested a lot of time and personal resources in starting or growing your business – selling it could make you feel like you are losing a part of yourself. . Nevertheless, it is always better to be prepared. Recent studies have shown that only about 10-15% of family businesses remain privately owned by the time the third generation is ready to take over.[1] Every year, an increasing number of transactions are driven by unsolicited offers. Preparing for a sale now will give you more control in the future.

Issues and questions to consider

What are your goals?

When considering whether or not to sell your business, it is important to define your objectives: clear priorities will guide your decisions and allow for a smoother process. Today’s trading environment can push you to rush into a sale to take advantage of seller-friendly terms. As it is often unavoidable to move quickly in the context of a sale, it is crucial to consider the important issues beforehand. To clarify your goals, you can ask yourself:

  • What is your main objective?

  • What is your ideal outing?

  • Do you prefer a strategic buyer already in your industry to a private equity buyer? Each has its advantages and disadvantages.

  • What is your post-release plan?

  • Is the family the best owner or manager of the business?

  • Are you in business to support your family?

  • Who are the stakeholders?

  • Are any of your priorities in tension with each other?

Your goal may be to expand the business to provide more support for your family. Alternatively, you may decide that you don’t want to sell but want to generate cash and receive help running the business. Or you may find that there is no reason to bring in a third party – your business is doing well and you want the business to stay in the family and retain full control. As a homeowner, knowing your family dynamics and your financial, retirement, and tax planning goals is essential to achieving your desired outcome. Without defined objectives, the sale will result in disappointment.

If you’re running a family business, chances are the economy has changed significantly since you started it. The resources you currently have may not be sufficient to compete with larger national and international competitors in the industry. Many small businesses that had a monopoly on the local market no longer have it. Others may have been successful in maintaining local control, but recognize that a larger company could provide the resources needed to grow the business. Keeping up with increasing regulations is also a challenge. Selling part of your business can expand what you can offer: larger entities have more sophisticated marketing teams, HR departments, IT professionals and extended customer service hours.

What is your game plan?

Selling a private business is usually a time-consuming process and can also be emotional. A typical sale transaction can take six to eight months from the decision to sell and will require significant management involvement. This process can take much longer if there are unnecessary obstacles that the seller is not prepared for. Careful planning and the right team are important to avoid roadblocks later. Additionally, if poorly managed, the sales process can be extremely disruptive to the business: it can affect relationships with suppliers, shareholders, family, and employees in ways that reduce the value of the sale. ‘business. However, a well-managed process can significantly increase the value of your business and promote growth under new ownership.[2]

Build the right internal and external team

Choosing the right team of advisors is crucial to the success of the transaction. Because a sales process is so disruptive and time-consuming, changing the team mid-sale is not only difficult to do, but can also diminish the market value of the sale. It is important that the owner(s) assemble a team that will work productively to achieve the best results for the seller. The M&A team typically includes the management team, legal advisers, an investment bank or other financial adviser, and accountants. The management team includes C-suite executives and will primarily act as a liaison between the M&A team, the board of directors, if there is one active, and other key employees to assist in the due diligence, contract negotiations and other matters. To ensure the deal is structured and documented properly, the owner will need to identify attorneys (who may all be from the same firm) with expertise in M&A transactions. These attorneys in this area will anticipate problems before they arise and protect the seller after closing. The investment banker or financial advisor is responsible for maximizing the value of the transaction by marketing the business and targeting potential buyers [a future issue of this series will cover hiring an investment banker]. You will also need an accounting firm to ensure that all of the company’s financial statements meet the necessary standards. Accountants will also coordinate with attorneys to address any relevant tax considerations. Additionally, the lawyers and accounting firm will provide support as buyers conduct their due diligence investigations.

Employee relationship management

Advisors can help manage communications and employee relations. You may have staff who have been with you for a long time and expect the business to stay in the family. Although it may be difficult to disclose your sales plan, it is important to maintain confidentiality. Employees are often worried about changes that may occur after the sale and may be looking for new jobs. Your employees are a key part of what makes your business attractive to a buyer; losing employees before a shutdown can affect the value of your business. In some cases, holding town hall meetings or preparing FAQs can be useful ways to communicate with employees while allowing you to control messaging and the flow of information. Your advisors can also recommend other ways to protect your interests and those of your employees (for example, retention bonuses can incentivize key employees to stay with the company while preserving the company’s value in the eyes of the buyer).

Also, you may never have worried about your employees signing non-compete agreements. If so, you might want to consider putting non-competition clauses in place to make your business more salable.

Value Drivers and Barriers to Selling

It’s never too early to get organized. Understanding and working to increase the value of your business will give you a head start if you decide to sell.

  • Financial records: It can be helpful to have audited financial statements. This sometimes involves the use of another or an additional accounting firm. The buyer will do their own due diligence, but it can be beneficial to be confident in your financial records before committing to a buyer.

  • Intellectual Property: Depending on your industry, your company’s intellectual property may be the most important asset class. If so, it is essential to have your commercial contracts, patents and trade secrets reviewed by an intellectual property lawyer to ensure that the ownership of these assets is clear. An ambiguous ownership will compromise the value of the business.

  • Employment contracts: Review employment contracts to ensure that your key employees will work toward a successful sale and stay after the business ownership changes.

  • Commercial contracts: These should be examined, among other things, to check whether there are any provisions such as change of control clauses, restrictions on assignment or exclusive rights that could hinder a transaction.

  • Company records: Performing due diligence on your own records can also be helpful in identifying issues and providing solutions before the buyer identifies those issues.


1 See “A Toast to Morley Safer”, CBS News, May 22, 2016,; George Stalk, Jr. and Henry Foley, “Avoid the Pitfalls that Can Destroy Family Businesses,” harvard business reviewJanuary-February 2012,

2 Cohen & Company, Ltd., Selling a Private Company: Valuations, Processes and Best Practices2017,

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