As part of Flint & Genesee Group’s Talent Matters webinar series – which challenges businesses and organizations to think creatively about the way they develop, attract and retain talent – we recently brought in Brooks Kindel of the Michigan SBDC’s Growth Team to speak about succession planning.
If you are looking to sell your business or retire, we recommend watching the entire webinar recording, which is provided below. Some highlights include:
The first thing to ask is, “What am I selling?”
The answer – which might be a job, equipment, real estate, intellectual property, a book of business (i.e., a group of relationships with customers) or a sustainable business – will determine a number of things, including your target buyer.
“Interestingly enough, with the supply chain shortages and all of the disruption that we’ve had in the economy lately, there may be an interest in buying a business just to get at its equipment because you can’t get new equipment,” Kindel says.
Ultimately, there are two types of buyers, internal and external. Internally, you might be looking at a partner, someone from your leadership, one or more employees or a family member. Externally, there are financial buyers looking to build their portfolios or – where the biggest value comes from – a strategic buyer, says Kindel.
“A strategic buyer is someone for whom you have something they don’t have, desire to have and have determined that it’s cheaper or better to buy than it is to try and recreate,” Kindel says. “(It’s) somebody for whom the acquisition of your business complements what they do and increases the sum of the parts.”
If it’s not an internal sale, you have two main routes to take in finding a buyer.
The first, says Kindel, is to engage your network. Talk to your attorney, CPA and contacts through industry associations, who may have other clients who may be interested in buying a business. That said, this method comes with the risk that your interest in selling could become more widely known.
If you prefer more confidentiality, there’s also the option of a business broker, who would be aware of people looking for businesses and can qualify a potential buyer, or determine their financial capabilities as it relates to buying a business.
To find a broker, Kindel recommends asking colleagues for referrals and connecting with the Michigan Business Brokers Association, where you can identify brokers who specialize in certain industries. If you go this route, Kindel recommends interviewing several brokers before hiring someone. You should ask about fee structure, how many sales they’ve had in the last year and other questions, included in the recording below.
It pays to plan ahead.
According to Kindel, you generally want a three-to-five-year runway to prepare your business for sale – and to sell it as the maximum price.
“That’s an ideal time to start working with an exit planning professional,” Kindel says.
Looking forward, the Talent Matters series will cover internships and apprenticeship programs (March 22). Recordings of these webinars will also be available after their air dates on Flint & Genesee Group’s YouTube channel. Learn more at flintandgenesee.org/training.