Selling Your Business

To maximize your returns and enjoy a smooth transition, planning early is paramount.

Scott Lynes, founder of a wholesale apparel company that represented more than 40 brands, started by hiring a chief financial officer with experience preparing companies to be acquired. “I wasn’t even sure I wanted to sell but I figured that just in case we may as well get the house in order,” he says. “The best advice I got was to hire a CFO who could say, ‘Here’s what we need to tweak, here’s how to improve so we have the best product to put out there.’”

Justin Havlick, founder of a packaged snack food company with brands found in more than 40,000 U.S. retail locations, began preparing to sell his company at least two years prior to the transaction.

“We were asking questions like, are we set up to maximize opportunities and are we positioned in the right way?” Justin said. “Are we set up to accomplish our goals as a family?”

In addition to preparing the company operationally, legally and financially, Justin said estate planning and pulling off a family move from Colorado to Hawaii were also part of his two-year timeline. “That early preparation made a huge difference,” he said. “At the moment you feel the itch to sell, plan out how it will look. Build your professional team at that point.”

Managing a large transaction and all that goes into it is a team effort, and it’s critical to have the right relationships in place at the beginning of the process.

Justin says he was surprised by how much he and his family leaned on their financial advisors, private equity firm, accountants, attorneys, and others in the two years they spent planning to sell his food company. His financial advisors even helped manage key milestones and timelines over the two-year planning period.

“They were very disciplined in keeping us on track and project managing every aspect of the sale timing with and our family’s move,” he said. “Having the right team in place two years out and preparing every step of the way was key.”

Matt Rooney, a veterinary surgeon who sold his clinics, said having a trusted team to help assess prospective buyers and review the paperwork was pivotal in choosing the right buyer and getting the best possible deal.

“I had no business training, just a two-hour class in veterinary school, so I was kind of winging it,” Matt said. “Finding the right experts and learning from their skills and knowledge was key — I was like a sponge throughout that process.”

Matt chose Crestone (now Pathstone)-after a friend recommended them. He says he has relied on his advisors not only throughout the sale process but also for post-transaction investment advising, accountant referrals, legal support, estate planning – even travel agent referrals.

“The last thing I wanted was to manage money, so I was looking for a firm that could take care of it all,” Matt said. “The peace of mind that provides is wonderful.”

The adage, “It’s lonely at the top” often holds true for founding executives steering their own companies. Many entrepreneurs who have successfully sold their businesses say they benefited from being part of peer groups that bring founders together to share experiences and ideas.

For both Scott and Matt, being part of a long-term peer networking group played a large role in their decision to sell—and the support they got along the way. Scott, the apparel company founder, belonged to a group of chief executives across non-competing industries for more than 12 years. They helped him navigate challenges and eventually inspired him to sell his company.

“We’d have a day of roundtable discussions to talk about challenges in human resources, financing, sales, etc.,” Scott said. “I couldn’t talk to my employees about these challenges, so this group became a great sounding board. As I watched them sell their companies, I saw that there really can be life after your company.”

For Matt, forming a management group with other specialty vets was a gamechanger—one that wound up playing a direct role in his deal. After several years of meeting regularly to share best practices and listen to outside speakers on marketing and other topics, Matt and five participants in the group decided to unite their vet practices and sell them as one entity—enabling them to maximize the returns.