If last week’s post summarizing the third panel from the Transitions in the Family Business: A Conversation with Family Business Owners and Leaders event piqued your interest in selling a family-owned business, you may have more questions about the sale process. As part of the Transitioning to a New Owner panel, Frank A. McGrew IV, managing partner of McNally Capital, shared his top 10 questions that family business owners and leaders should ask before pursuing a sale of their business.
- Is your business ready to sell? Any buyer’s due diligence process requires a thorough evaluation of the seller and the seller’s business. Is your business ready for this examination?
- Are you personally and mentally ready to sell your business? It is easy to be consumed by the immediacy of the sale process. Before exploring a sale, ask yourself: What would I do next and for how long? How much money do I truly need to live on if I sell my business?
- When is the right time to sell? How will you know when the time is right? What are the trigger points to watch for, and how do you measure those?
- How much is your business worth to you? How much will another buyer want to pay? What is the likely range of these values?
- Who is the best and/or the right buyer? Are there certain buyers you do not want to approach or sell the business to? This could include competitors.
- How can you increase the odds of success in your favor during a sale and transition process?
- How can you maximize the purchase price and net proceeds from the sale?
- How can you quantify and better understand the principal risks for your business and a transaction process before you begin?
- What issues must be addressed before beginning a sale process? For example, these could include legal, environmental or customer/supplier issues.
- Who and what are the most appropriate outside experts and resources you need to utilize for a successful outcome? Frequent players include a transactional attorney, a banker, a wealth management advisor, and a trustee. Perhaps most importantly, who will “quarterback” this process as your client consigliere?
After reflecting on and answering the questions above, potential sellers will be better equipped to succeed in a sale transaction.
This blog post was co-authored by Frank A. McGrew IV of McNally Capital. Frank is a Managing Partner and leads the Merchant Banking efforts at McNally.