Published: 16 October 2015
It is the rare business that you can sell, then immediately walk away holding the check and staying totally uninvolved as the business moves forward with the new owner. Most sales of businesses will require the owner to ease out of management
gradually. Creating a smooth business transition benefits you and the new owner, insuring that your business has the best chance of survival after the sale.
You and your business advisor have prepared your business for sale. It has gone through an evaluation, you have set a strong management team in place, and your business records are accurate and complete. You have a buyer, but part of your sales contract will probably include a transition period where the business will slowly be transferred over to your buyer. This is especially important in service businesses where the reputation of the owner is a strong asset.
What should you be required to do during this transition? You and your buyer should come to some agreement as to your involvement in the day-to-day operations, and then how you will be eased out. Will you introduce him to your vendors and customers, then step into the background? Will you continue to sell or service customers? Does your buyer need to learn the essential skills of your business? At the very least, he will have to learn your operating systems and how you have managed the business tasks. Once he has a clear idea, he can decide if he wishes to change your procedures.
How long will your transition last? Sometimes, the new buyer will just want you to disappear, but others will want you involved at some level for some period of time. If you are not ready to quit working, you can include yourself in the business management team and become your buyer’s employee. Realize, however, that not all buyers will be comfortable with that arrangement. Personality and management styles are extremely important in this type of transition. No new owner will want you interfering or questioning their decisions, so your “term of employment” might end up being shortened depending upon how you work together.
As you can see, a smooth business transition needs to be thoroughly contemplated, taking the needs of both buyer and seller into consideration. Both of you need to agree upon how much you are required to be involved and for how long. The basis of a good agreement will be candid communications and an expert to guide you.
Although preparing and selling your business is three-fourths of the task, the importance of a smooth business transition can’t be minimized. The Savickas Group has experts in all fields which, first will help you to get your business prepared so that you can receive the optimal return on your investment, then secondly, help you to formulate a smooth transition plan that works for you and your buyer. Contact us today to explore your options: 1-888-210-8269 or firstname.lastname@example.org
Don’t know where to begin on selling your business? We have created a free eBook which will introduce you to the process: Maximize Your Exit, 9 Tips to Capitalize on the Sale of Your Business. Simply contact us and we will send you a free copy.
Thanks to Bossl for his creative commons photo.