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W W W. M A I N E B I Z . B I Z 25 A U G U S T 2 4 , 2 0 1 5 H OW TO W hen is it too late to sell your business? Over half of the business owners that contact brokers about selling have distressed or declining businesses. ese businesses may be suff ering from owner inattention, lack of innovation or cash-fl ow problems. ey may even be headed toward an imminent bankruptcy. Many, on the advice of advisors, contact a broker hoping a sale will solve their problems. ese businesses are often called distressed, turn-around or pre- liquidation opportunities. Sellers should not expect to receive a premium on a distressed business, and rarely will a buyer pay for goodwill. While a broker may be able to fi nd a buyer willing to pay higher-than- liquidation value, it can be diffi cult to close a deal: time is critical and the seller is negotiating from a weak position. It is a very rare buyer who has the confi dence, vision and capital to take on a distressed business. It's already hard to fi nd the right buyer for a profi table business; bad "facts" narrow the pool of possible buyers much further. Once a shrewd buyer realizes that the business is distressed he can either make a low- ball off er or wait out the failure and try to buy the assets through the bank- ruptcy proceedings. Why do many sellers wait too long? 1. Many buyers feel that selling is "giv- ing up" on their business. ey believe they just need to refocus to fi x the business. But many are too burnt out or stressed to eff ectively do that. Once they realize they don't have the energy for "one last push" they may have wasted months or even years. 2. ey miss time the market. Hindsight is 20/20 and, while few owners want to sell when their business is fl ying high, that is the best time to sell and receive the maximum value of the business. 3. ey don't think about an exit strat- egy. Acknowledging an exit strategy, retirement or a life change can be diffi cult. Many business owners put off planning about their eventual transition until the business is under- performing or failing. 3. Business valuation. Many owners are surprised when they have their businesses valued or appraised. It's not uncommon for an owner to overvalue his or her business, often driven by the emotional value it represents and the years of hard work invested. A realistic market appraisal combined with the tax implications can be a sobering reality. It may be helpful to identify what "stage" your business is in. Generally, a business grows, matures and then begins a slow decline which would require reinvention, capital improve- ments or new operational effi ciencies. Many sellers wait until the later stages before considering a sale. Unfortunately, this is the stage when it's both diffi cult to sell and the business will be valued at a considerable dis- count. Business owners should be aware of the factors that drive the value of the business. Not only will this help them maximize the price of the business, but it gives an owner the data needed to make a decision about selling. When is too late? If you have only weeks or months left before you are forced into bankruptcy there may be little a broker can do. A quick closing can still take many months between due diligence, fi nancing and drafting sales agreements. In general, selling a business can take one to two years — especially if the business needs to be prepped. All things being equal, you will be better off selling your business before it peaks, rather than after. Planning your exit strategy should begin early. Talk to your lawyer, accoun- tant, fi nancial advisor and a broker to determine the value and salability of your business and the tax implications of the sale. Brian D. HanSon, president of Maine Business Brokers in Portland, can be reached at brian @ mainebUSineSSbroKerS.Com Know when to sell your business B Y B R I A N D . H A N S O N It's about jobs. It's about stability. Together with our partners in the community, Goodwill has set a 10 year goal to help 10,000 households in the region build stable lives through work. Learn more at goodwillnne.org. Workforce Solutions One-Stop Center - A Partner in the CareerCenter Network 190 Lancaster Street | Portland It's not uncommon for It's not uncommon for It's not uncommon for It's not uncommon for It's not uncommon for It's not uncommon for It's not uncommon for It's not uncommon for It's not uncommon for an owner to overvalue an owner to overvalue an owner to overvalue an owner to overvalue an owner to overvalue an owner to overvalue an owner to overvalue an owner to overvalue an owner to overvalue an owner to overvalue an owner to overvalue an owner to overvalue an owner to overvalue his or her business, often driven by the emotional value ... and the years of hard work invested. PRESEN T ING SP ONSORS Save the date! FOLLOW US @MBEVENTS #CEOForum15 For more information visit mainebiz.biz/CEOForum Abromson Center 88 Bedford Street, Portland October 21 8:00–11:00am Although making mistakes is one of life's great teachers, its lessons aren't always clear. Hear personal stories from our panel of CEOs about their trials and tribulations and learn how they deciphered what those lessons were, how they used them for success, and what would they do then, knowing what they know now. OUR PANELISTS INCLUDE Gena Canning: Managing partner, Pine State Trading Co. Gregory A. Dufour: President/CEO, Camden National Bank Kate McAleer: CEO, Bixby & Co.

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