Congratulations, you’ve just sold your business for millions.
You’ve signed all the papers, jumped through all the hoops, and handed off the last details.
After years of investing your time and energy into every aspect of your business, you are eager to finally see a sizable (and well deserved) financial payout.
But a few weeks later, as you’re tying up loose ends, you realize the math doesn’t add up.
From unpaid wages to broker fees, you’re faced with a long list of expenses you didn’t plan for. When all is said and done, the flashy price tag that your business sold for is not what is in your bank account.
You begin to panic. What did you miss?
And where are all these expenses coming from?
IT’S NOT WHAT YOU MAKE…
At Capital Concepts USA, we’ve worked with clients who find themselves in this unfortunate position. They’ve estimated their expenses post-exit and realized that they won’t be getting the financial prosperity they hoped for from their sale.
Too often business owners sell without
1️⃣ considering ways to make their business more sale-worthy to begin with
2️⃣ knowledge about the expenses they’ll be financially responsible for as a part of the sale transaction.
As our president Lorne Greenfield, CEPA® says, “It’s not what you make, it’s what you keep!”
So what expenses should you expect? And how can you prepare in such a way that you increase the amount you “keep” after a sale?
EXPENSES TO EXPECT
Here’s the reality: there are diverse expenses that are likely to come up during the sale of any business.
And most of these costs are ones that you, the seller, will be expected to carry to consummate the sale transaction.
A few of these are:
☑️ Finalized salaries and wages
☑️ Fulfilling rent or lease payments
☑️ Business broker/investment banker fee & commission (likely involved when sales exceed $10million; fees may follow a Lehman Schedule)
☑️ Fees for any other advisory services
☑️ Listing costs & marketing collateral
Additionally, you’ll be responsible for closing costs and legal fees associated with finalizing the details of the sale.
There are a diverse array of costs depending on the type of sale. Be sure to do your research and talk to trusted professionals!
A SIMPLE STARTING POINT: BUILD & BEWARE
To summarize, there are two simple mindset shifts that could radically alter your financial status post-sale:
BUILD
Focus on what you can do now before you sell.
Most business owners are so fixated on the estimated value of their business that they neglect to imagine ways to make it even more profitable and miss potential earnings.
This robs them of the potential already at play in their business. The truth is, your business can scale and grow — thus increasing its market value — years before you decide to sell. You can (and probably should) start planning now to ensure that your business is functioning at its highest, most profitable potential.
Don’t get so focused on the final goal (sale) that you neglect what is right in front of you.
BEWARE
Educate yourself on the surprise expenses that will decrease your net gain after you sell. By equipping yourself with knowledge about the sale process, you’ll avoid any surprise costs (like the ones listed above).
At Capital Concepts USA, we have financial, marketing and sales, and operations consultants who can work with you to craft a plan and set goals that will make a difference in your business. Contact us today for a free 15-minute call with our founder, Lorne Greenfield.
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