When he owned the Modern Sixties Wine Lounge in Fort Lauderdale, Florida, Frank Ruppen spent his days placing orders and overseeing administrative tasks and inventory. His nights were full too, as he dedicated time to building relationships with customers. In 2017, Ruppen — who was 59 years old and ready to retire from the bar business — decided to sell the wine bar to an acquaintance.
"I got my life back,” Ruppen says.
Selling your business can do more than just free up time: The proceeds can fund your retirement. Yet hanging a “for sale” sign doesn't guarantee everything will fall into place. Ideally, business owners should prepare for the transition well ahead of time, according to Joel Guth, CEO and founder of Gryphon Financial Partners, a wealth advisory firm in Columbus, Ohio, that helps business owners plan strategic exits. “A three-year window before exiting allows time to work on key issues,” he says.
The right road map can lead you through the steps of preparing, selling and moving comfortably into retirement.
Figure out how much your business is worth
It may be easy to think your business is valuable, but a quick glance at its revenues won't really reveal the big picture. Having the company professionally assessed can help you evaluate how its assets and liabilities line up, along with what prospective buyers might be willing to pay. “Get a qualified team of advisers,” Guth says. Professionals with experience preparing and selling companies can help you lessen risks and identify strategies to increase the sale price.
"Review in detail two prior years’ tax returns and make sure they align with the business valuation you're looking for,” says David Moore, president of Dandelion Mergers & Acquisitions, headquartered in Charleston, South Carolina. Past financial performance plays a role in determining what a company is worth. Check if debts from previous years could be paid off to reduce liabilities.
Get ready to hand over the reins
When Craig, who asked that his last name not be used, put the software business he founded and oversaw for 24 years on the market, he felt the first offers he received were too low. In hindsight, there was a reason behind the numbers. “The company wasn't ready,” he says. Craig — who was 56 years old when he sold that company — and his staff then spent the next few months working with professionals to get the firm in better shape, and he ultimately ended up selling the business for a suitable price. “Do a mock due diligence [like I did] before selling,” he suggests. “It costs a little, but it will show every hole a buyer will look for.” You can then work on fixing those problems to make the enterprise attractive to buyers. “It's like selling a house,” he says. “You first put in fresh carpet and paint.”