Opinions expressed by Entrepreneur contributors are their own.
After years of nurturing your business from an idea to a thriving entity, you may reach a crossroads that will shape both your company’s future and your personal legacy — the decision to sell your business.
Navigating this moment is no simple task; it can feel like you have more questions than answers. Does your family plan to carry on your legacy by eventually taking over operations, or do you need to consider a transfer of ownership? If it is the right time to sell, do you wish to entrust the day-to-day management to new hands, or would you prefer to stay involved?
In my role working with entrepreneurs every day, I’ve seen that two key obstacles emerge during this stage: assessing the true value of your business and determining your role in the business post-sale. With the right combination of reflection and due diligence, you will have the insights you need to move forward successfully.
Related: The How-To: Building An Exit Strategy For Your Business (Even Before You Start)
Navigating the valuation
Once you’ve decided it’s the right time to sell, you must determine your target sale price and what portion of the business you’ll retain. These are skills you might have honed during previous funding rounds, but now, emotions come into play.
While every business is unique, some timeless advice holds true.
First, seek expertise from an industry-specific M&A advisor. An M&A advisor will provide guidance and support in assessing the value of your business, negotiating the sale price and preparing for a sale. Leverage your network – your banker may be able to offer recommendations – or consider tapping into a professional association to find an advisor you trust.
During this process, try to detach yourself from emotion. Founders, having built their business from scratch, often find that their emotional attachment inflates the value of their company. Be prepared: the perceived value of a business often exceeds its true economic worth.
Related: Is Now the Time to Sell Your Business?
On the other hand, don’t underestimate your business. Alongside tangible assets like investments and real estate, consider intangibles like proprietary knowledge or client relationships that might hold value for a potential buyer. Your M&A advisor and legal counsel can help provide an unbiased analysis.
Finally, you’ll need to determine how much of your business you wish to sell. If you’re ready to move on from the business, an outright sale might be the best decision. However, if you wish to stay actively involved in the business, a partial sale where you retain some ownership might align better.
Finding your place in transition
But how do you determine where you fit into this equation? Your business is a product of your passion and dedication, and parting ways means letting go of something you’ve built from the ground up.
I recommend beginning with an honest self-assessment, which I covered in a previous article. Assess your business’ lifecycle and your medium- and long-term goals. Then, think about where you fit into that plan. Ask yourself if you have exhausted your capacity to add value as the CEO or if the untapped potential awaits exploration. Perhaps you could more easily achieve your next growth phase with the support of someone else’s network, customer base, or business relationships.
You don’t have to navigate this process alone. Mentors and advisors who have sold their companies in the past can provide valuable guidance and could even introduce you to potential buyers. In addition, consider hiring a market research firm to provide insights into your sector or the current economic environment.
Most importantly, be honest with yourself about the motivation behind the sale. Consider whether you’re contemplating retirement or pursuing a new venture or executive position. Envisioning where you see – or don’t see — yourself in the next chapter of your life can help shape your sale strategy.
The internal self-check is the compass that will guide your role in your business’s future. For many CEOs, a transitional phase follows the sale to continue sharing institutional knowledge and maintaining relationships with crucial clients. If you are stepping down as CEO or completely exiting the business, create a comprehensive plan to share these relationships and knowledge with your leadership team.
Related: How to Navigate to the Next Phase of Your Business — 3 Tips as You Scale
Staying true to your course
As you embrace the exciting shift toward a sale, remember that the most important thing is having a thoughtful transition strategy. With honest self-assessment, you will ensure that your next steps align with your personal goals. And with advance planning, you will ensure that the process is seamless for everyone involved and that the business is set up to thrive for years to come.
