Questions To Ask When Selling Your Business

Questions To Ask When Selling Your Business

If you are selling your business, Decision Associates Mergers & Acquisitions recommends that you ask a number of questions to truly assess your timing and opportunities. Remember that anyone who has the money to buy your business will be looking at many businesses, perhaps even your direct competitors.

Assess the direction of your company for the next few years

  • What will growth be like? 
  • What is the profit picture of the next few years?
  • Where are the new customers and markets and what do they demand of you – from quality systems to equipment to new operations?
  • Who are your best competitors and what are their strengths and weaknesses? 

Assess your capital investment and infrastructure needs.

  • Equipment? Buildings? Technology? New Product Development? Plant layout and design (which has a huge impact on efficiency and cost)?
  • New people needed?  Remember, if the company grows, you cannot continue to wear all the “hats.”
  • What are the top five things that your company must do for success in the next five to seven years? 
  • Would the list be different regardless of whether you keep the business or sell?

Assess what it takes to sell a company like yours, in your industry.

  • Who would be likely buyers?
  • What would buyers look for in a business like yours: what do they want?
  • What other companies would buyers likely look at and how would those companies compare you?
  • What would buyers think of your customers and markets?  What type of buyers would want those customers and markets?
  • What would buyers think of your equipment and process technology?
  • What would buyers think of your plant? Its layout? Housekeeping and cleanliness (buyers assume a dirty plant is run poorly)?
  • What would buyers think of your computer systems, quality systems and cost systems?
  • What would buyers think about your profitability? Recent capital expenditures? 
  • Is your compensation normal for your industry or too high (or too low)?
  • What would buyers think of your team at all levels?  Would they believe that the business can run without you?

Assess if you want to keep your business for five or more years.

  • What do you want to accomplish with the business in that time?
  • How will it look different than today?
  • What are the variables and risks that could affect marketability (up or down) over that period of time, such as industry changes, a recession and increased competition?
  • Are employees going to feel stable over this time (keeping the best is important to value)?
  • Do these changes indicate selling now or keeping the business for a future sale?
  • Are you comfortable with the risks of keeping it?

Assess Your Future

  • What type of life do you envision for yourself in 10 years?  Does the current and future pace fit your plans?
  • If you did not have this business, what would you do?  Retire? Start another company? Get involved with nonprofit organizations?
  • What is your tolerance for “risking it all” one more time? It is unlikely that your company can stay unchanged. It is going to take investment to be successful. 
  • There will be another recession sometime in the next three to four  years. The window of opportunity to sell a business will slam shut at the first sniff of a turndown and stay closed for three years.

For a better understanding of these questions, contact Decision Associates Mergers & Acquisitions.

“Decision Associates conducted a marketing research project for us recently that resulted in a large new customer, and we have a list that we will continue to target. Ricardo Guardiola was very thorough and has a good methodology that has been refined at Decision Associates. Our expectations were exceeded in that we got a lot more information that we originally thought we could get. Their “step by step” approach worked well for ATP, and we would recommend their team for other projects of this type.”

~ Scott Eighmy, CEO
American Turned Products (ATP)

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