Selling Your Business

There are many kinds of potential buyers and many ways to structure a sale. But it all starts with your goals.

For many business owners, selling to an outsider offers the potential for a clean break when it comes time for life’s next chapter. Others may plan to continue leading their companies but need an infusion of capital to fund expansion or a move into new markets. Whatever the situation, a successful sale can open doors to whatever comes next.

Too often, however, a failure to consider how to sell the business keeps those doors shut. As many as 90% of businesses listed for sale never find a buyer, according to the International Business Brokers Association†.

And failure to make a sale or get an adequate price can have devastating financial, personal, and emotional consequences, says Jill Garvey, senior wealth strategist for Huntington Private Bank®.

Garvey tells of one owner who assumed his business would sell for top dollar but had continued to run it with little thought to what a buyer would actually look for. He staffed it with a skeleton crew, reducing revenue at a crucial time, and failed to prepare the books for outside scrutiny and to have the proper legal documents in place.

The company sold for far less than the owner had anticipated, forcing him to rethink his plans, including charitable giving.

Such problems are all too common: In a Market Pulse Survey of owners selling their businesses, 30% of owners of businesses worth between $5 to $50 million had done no planning, and another 30% had listed their companies for sale after less than a year of preparation‡.

This type of short-term preparation can lead to lower-than-expected selling prices and derailed succession plans.

A clear strategy can lead to a successful sale and a seamless transition. “The best transaction meets all or most of an owner’s goals,”§ says Garvey. “There’s the business objective, of course. But you may also have goals for the business’ future in the community, as well as your personal and family goals.”

Moving from "why" to "how"

Once you’ve decided to sell, you’ll find there are several kinds of potential buyers. “You might look for a strategic buyer who wants to get into your business or to establish a local presence and who sees synergies with your company,” says Garvey.

Or there might be a financial buyer, attracted by your business’ profitability. “That could be in the private equity market, with an investment that lets you exit completely or just take some cash out of the business,” she says.

You could sell to your employees through an employee stock ownership plan, or ESOP, or if the company is large enough, you might consider an initial public offering, or IPO.

Often, your personal motivations for a sale can directly influence how it is structured, and which kind of buyer or partner you consider. One owner sought diversification. “He didn’t want all of his assets concentrated in the business,” Garvey says. He also wanted to continue to lead the company for several years and help it expand.

The goals informed how he would proceed. He partnered with a private equity firm that provided four injections of capital, turbocharging the company’s growth while increasing the wealth on the owner’s personal balance sheet and paving the way for his eventual departure.

Another owner’s primary concern was his employees. “He felt they had put their blood, sweat, and tears into the company, and he wanted to make sure they were taken care of,” Garvey says. He sold shares of the business to the workers through an ESOP, while also making sure there would be a strong management team in place during the transition.

This approach, which triggered capital gains taxes when shares were transferred, was costly from a financial perspective, but met his emotional need to support the employees and the community.

In other cases, maximizing a company’s value is paramount. The owners may be more emotionally detached, having built the business specifically to sell it to fund post-business lifestyles. “The choices you make depend on your ultimate goals,” Garvey says.

Preparing for a sale

When an owner considers how to improve a business’ curb appeal, several aspects may need attention. “We want to get that business in the best possible shape to attract a buyer,” says Garvey. That means making sure financial statements are in order and easy for a potential buyer to understand.

This stage also requires some strategic soul-searching about how best to position the business, and to anticipate what potential buyers will want to know. That may involve issues of corporate governance and structure, according to Garvey.

“But also ask yourself where the company’s real value is,” she suggests. “Is it in the management team? The sales force? The product? And how crucial is the owner to the company’s operation?”

The best transaction meets all or most of an owner's goals—the business objective, of course. But you may also have goals for the business' future in the community, as well as your personal and family goals.
Jill Garvey
Senior Wealth Strategist, Huntington Private Bank
Factoring in the family

This is also the time to address family members’ interests. There should be written agreements with those who work in the business, and advance planning to transfer assets to those who don’t.

“You may want to gift shares to an irrevocable trust with family members as beneficiaries,” Garvey says. “This needs to be pinned down well in advance of signing a letter of intent.”

Finding help

“The most important step in setting a sale in motion is to gather the appropriate team of advisors,” Garvey says. That includes a CPA, who for most owners is someone they’ve worked with for years and who is privy not only to the financial side of the business but also the personal aspects.

A corporate attorney will also be vital, and if there will be mergers, acquisitions, or divestitures, you may want to call in an investment banker. Other legal specialists—a tax attorney and a trust and estate attorney, among others—are likely to be needed, especially if shares of the company will be distributed to family members before a transaction.

You’ll also need a valuation consultant who can provide a very detailed analysis, comparing the business to local, regional, and national competitors. Keep in mind that the objective may not always be to get the highest possible sticker price.

If there’s a sufficiently long lead time, a lower initial valuation can maximize how much of the business can be passed along to family members without gift taxes.

Getting started

The wealth advisor can often serve as the key person on this team and can make the ins and outs of a very complex process flow more smoothly.

“We can look at the macro viewpoint and help owners consider how the business sale connects with personal goals,” says Garvey. “It’s a pivotal role, making sure everyone stays on track and communicates with each other. If I can ask the right questions and get answers in a timely fashion, and then delegate work to the appropriate team members, that really helps streamline the process and achieve what the business owner truly wants.”


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Parker, Richard. The business for sale marketplace why 90 of listings never sell. 24 October 2016.

Market Pulse, Fourth Quarter 2018. International Business Brokers Association. February 2019.

§ Interview with Jill Garvey

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