We are hearing more and more often that selling a business will become increasingly more difficult because there will be limited Buyers as well as limited funds available for the purchase. Baby Boomers will be retiring soon, which means more businesses available for purchase, and also means Buyers will be competing for the same limited pool of funds to finance acquisitions.

We suggest that Sellers plan to identify a potential Buyer sooner than later whether the potential Buyer is a current employee of the business or an outside third party. Even if the Seller isn’t ready to get out of the business, identifying a potential Buyer and creating an entry plan for that Buyer will promote success for the business after the Seller is gone. Such an entry plan is attractive to both Sellers and Buyers. These plans take into consideration maintaining consistency in the business for clients, helps facilitate the transfer of leadership for staff, and gives the Buyer firsthand knowledge to prepare for running the business. A Seller that is willing to help the Buyer continue to operate the business successfully after the ownership transition may make the business more attractive to a potential Buyer as it helps ensure the continued success of the business after the transition of ownership. This planned succession will most likely be more attractive to lenders who may be willing to finance the transition. It may also be necessary for the Seller to help finance at least a portion of the transaction in order for the Buyer to complete the purchase.

Creating your own succession plan in advance, will insure you have a Buyer and you leave your business in the best possible shape for future success. It’s never too early to start thinking about a succession plan that is profitable for the Seller and the Buyer. The attorneys at Thomas Law Group can assist business owners with every step, from planning to the actual sale.