There’s a lot of humor to be found in the entrepreneurial life. One of the funniest things I heard was during an initial meeting we had with a married couple about selling their business. “We’ve been married for 30 years,” the wife told us. “But we’ve been in business together the entire time, so that’s really like 60.”
Over the years we’ve helped dozens of couples with the sale of their business. The extent to which one or both spouses are involved in the actual operations can vary. Typical scenarios include:
- Both spouses are equally active in running the business.
- One spouse runs the business, the other has a supporting role in the business.
- One spouse runs the business, the other no longer works in the business.
- One spouse runs the business, the other never worked in the business.
No matter what the working arrangement, most couples make big life decisions together. Your spouse is typically your best friend and most-trusted advisor. They — not your CPA, attorney, or peers — will likely be the first person you talk to about selling the business.
Following are a few things you may want to discuss.
Are you both equally motivated to sell?
There have been a few times when we’ve heard a husband joke, “my wife says she’ll divorce me if I don’t sell the business.” That’s our cue to try and determine if the comment was simply an ice-breaker, or if one person wants the business sold more than the other.
Successfully closing a deal requires 100% commitment from everyone involved. Getting to the bottom of who’s motivated, how much, and by what is critical.
In the above scenario, it may be that the husband has been experiencing health issues, and the wife is forcing him to admit that he needs to slow down. Regardless, it’s fine if you have different reasons for wanting (or needing) to sell the business. What’s important is that you’re both committed to the decision to sell.
If one or both of you have hesitations about selling the business, address them at the outset. Two weeks before closing is not the time to admit that you can’t go through with your decision to sell.
Imagine the two of you skydiving, one strapped to the other’s back. If one of you is having doubts about whether or not you can jump, keep the plane in the hangar for now.
Have an honest discussion (or several) with your kids
Regardless of whether or not your kids work in the business, they need to understand that you’re serious about selling. Oftentimes we’ve heard kids say they are totally on board with mom and dad selling the business (“whatever is best for their retirement”), only to watch them reveal their true feelings once a serious buyer is on the line. The parents are shocked, and a hornet’s nest of non-business issues are let loose at the worst possible time.
Do your best to get any and all family drama resolved before starting the process of selling your business. Insist on honest answers. Don’t be afraid to hire a neutral third party to facilitate family discussions if necessary. It could help preserve a fantastic opportunity to sell your business, and avoid a lot of wear and tear on your most precious relationships.
At the end of the day, you’re the boss. Make your intention to sell the business clear to your kids, and push them hard on how they really feel about it. A few heated discussions today pale in comparison to a future filled with uncomfortable family gatherings.
Identify your “big” issues
Most sellers have a list of primary goals for a sale that must be met. These can include:
- Purchase price and net proceeds from a sale (after fees and taxes)
- Terms of a deal, like cash at close, contingent payments and non-compete agreements
- Transition period (who does what post-sale, and for how long)
- Employee issues and cultural fit with the buyer
- Purchase (or not) of real estate associated with the business
Don’t assume that you and your spouse have the same priorities when it comes to the details of a sale. Make a list and articulate the “big” issues that each of you needs satisfied in order for a deal to close.
Discuss these with your M&A advisor or business broker, as well. They can give you some good perspective, and will ultimately need to communicate your goals to buyers.
Talk early and often
If you’re in the early stages of talking about a sale, make it a point to revisit the discussion on a regular basis, perhaps every six to twelve months. Here are some topics you may want to cover:
TIMING OF A SALE
Next year? In two years? When you turn 55? Don’t let selling the business sit in that perpetual limbo of things you’ll do “someday.” Selling a business takes preparation and planning. Put some definition around timelines.
THINGS TO DO BEFORE SELLING
Do you need to meet with your CPA and talk about taxes? If you’re more than a year out, are there things you can do that will increase business value before a sale, or make the business more sale-ready? (Getting a business valuation can be a good place to start the pre-sale process.)
Selling a business is easier when you’re looking forward to a new beginning. What will life look like for the two of you after the business has been sold? Will you travel? Volunteer? Build a new house? Start another business?
This is also the time to talk about what you will miss about your business, and how you will fill the void. Chris and I missed different things about our coffee business after we sold it in 2006. He missed leading a team and talking to customers. I had a hard time letting go of the popular brand we’d created. There’s always some sense of loss when you sell your business. The good news is that for each thing you’ll miss about your business, there will likely be one or two things you’ll be happy to leave behind.
Selling your business is often the biggest financial decision of a lifetime, and — regardless of the sale price — a big life decision for couples. Have some frank discussions with your spouse, as well as your children, as an initial first step in the process.
Do you have questions about selling your business? We’re here to help get the conversation started.
Author: Barbara Taylor
Barbara is co-founder of Allan Taylor & Co. and a former New York Times blogger. She has been a small-business owner since 2003. Barbara lives with her husband, Chris, and their two sons in Northwest Arkansas.