Selling Your Business? Get Professional Help.
By Kevin Smith Staff Writer© Pasadena Star-News, June 27, 2007
Looking to retire or sell your business?
The process will be a lot easier if you do some advance planning, according to Madhur Shrivastava, a licensed business broker with Sunbelt Business Brokers in Pasadena.
Shrivastava, 60, of Temple City advises business owners who are thinking of retiring, selling off their companies or transferring ownership to be proactive and craft an effective exit strategy.
Unfortunately, most don't plan ahead.
"Small- and medium-sized business owners are usually wearing many hats ... sometimes they're doing purchasing, accounts payable and a lot of other things," Shrivastava said. "They're so busy with what is here and now that they don't plan for when they may want to leave the business or retire."
Shrivastava said owners should employ the services of a CPA, attorney and business broker or some other professional who is used to buying and selling businesses.
"If you're selling a profitable business you also need to be talking to a tax professional," he said. "Planning all this is usually a three- to four-week process."
On average, it takes 8.3 months to sell a business. and only one in four companies that are put up for sale actually sell, Shrivastava said.
"Sometimes owners are very emotionally attached to the business and have an unrealistic expectation of the asking price," he said. "Or they may have a lack of documentation and records, which also makes a business harder to sell."
Sunbelt doesn't charge any upfront fees for its services, although the company receives a percentage of the sale once the business is sold.
"If there's no sale, there's no cost to the customer," Shrivastava said.
Gary Kaplan, president of Gary Kaplan & Associates, an executive search firm based in Pasadena, agreed that most small- and medium-sized companies don't have an exit strategy in place.
"It's something people tend to push to the back burner," he said. "Many of the executives I deal with don't have an individual exit strategy either. But you have to come up with a plan - you never know when lightning will strike."
Shrivastava said business owners should be represented by professionals when trying to sell their companies.
"Most people are likely to sell only one business in their life," he said. "If you're up against professional buyers, that's an uneven playing field."
Sunbelt requires buyers to sign a confidentiality agreement - a move that's designed to protect the seller, according to Shrivastava.
"It's not like selling a house where you put up a sign in front saying `Business for sale,"' he said. "You don't want the employees, competitors or customers to know because employees might leave or customers could leave. And that could lower the value of the company."
For more information, call (626) 395-0717 or go to www.sunbeltpasadena.com
