What Would I Change About the Process of Selling My Small Business?

Lessons learned about a complex process

This post was first published on my Medium blog—follow me there for the most up-to-date entries!

I recently sold part of my business. I have no regrets about what I sold, or the buyers to whom I sold. But the process was not easy, and advice online was scant. The articles I found talk about multi-million-dollar corporations, shareholders, angel investors and more, but give little practical help for selling a small business or a microbusiness. Here are 5 lessons I learned as I went along, or after we closed the sale.

Get clarity on my future role

I had some good insight into what my role might be going forward. I insisted that the buyer sign an “expert” consulting agreement before I would even consider an offer for the business. I wrote a 2-page outline and had a very clear idea of how I could contribute to the ongoing business and get paid for my subspeciality expertise as a clinical nurse specialist.

What I didn’t do was secure some agreement about how to actually provide those services, and hence have regularly billable hours. As it is, the buyers may or may not ever hire me for anything.

This is tricky, though — on the opposite end of the scale, I didn’t want to commit to doing something that I might later regret. I wondered if I might have more lucrative or more exciting opportunities to pursue instead.

When selling your small business,

outline, in writing, the role you think you want to play going forward,
ask yourself if your initial enthusiasm for the new buyers or the old field of expertise may wane,
consider asking for an expert consulting agreement before considering a purchase agreement, and
ask your attorney to leave a little wiggle room in the consulting contract to ensure that your wishes will be followed.

Ask more questions

I thought I asked a ton of questions. But in retrospect, I see many that I should have asked, but didn’t. Here are just a few questions I should have raised with the buyers, an attorney or other advisors.

Is the buyer planning to “flip” the business after the sale?
Must the buyer keep the name of my business? (If my restaurant is Marie’s Elegant Cuisine, can the buyer call it Mama’s Bar and Grill?)
Will my employees still have jobs?
What is my small business is worth? Other than the obvious dollar assets, what is my reputation and name recognition worth? Consider customer relationships, brand value, and what I call the “charm factor.”
If my name, image, or likeness is used in a way that discredits me, do I have any recourse?
If the contract contains no arbitration clause, is it too late to have arbitration for a possible dispute later?
Is there anything prohibiting me from announcing that I am no longer the owner of the business? Or, when will the buyer announce the sale and new management? Should we draft an announcement before the sale occurs?
May I keep my personal social media page, and if so, should that be specified in the contract? Are we talking about all of the business social media accounts, or just certain ones?
Should the purchase agreement include an addendum that addresses a transition phase that will occur after closing?

I’m not suggesting the answers to these questions are deal-killers. I’m saying, consider these or other relevant questions early in the process of selling your small business.

Consider a different attorney

I first hired a small business attorney in my locale. I generated a half-dozen or so questions. He called me with answers a few days later. I thanked him, then sent him an email thanking him for his advice and asking him to send me the bill. I felt he totally missed the mark.

Next, I hired a contract attorney I had worked with in the past. She has more than 40 years of experience writing contracts. She did a remarkable job of writing language to satisfy many of my questions and worries about the purchase offer. She added about 50% more words than what was in the first draft of the offer. She was worth every penny of her fee.

In retrospect, I might have tried to find an attorney who specializes in mergers and acquisitions. But if I had done that, I would have needed to start my search months before selling my business. Besides, I was reluctant to work with someone with whom I had no rapport.

Be more aware of leadership styles

Ex-owners and new owners typically have an agreement whereby the former owner stays on to do executive-level advising for several months after selling the small business. In theory, passing the baton is a great idea, but without a clear transition plan in place, it can be stressful.

Buyer and seller may have very different leadership styles. The four different communication styles I learned in graduate school decades ago are still valid, but I feel it’s more useful to consider the seven different communication styles. I quickly saw that such differences have an impact for the current owner, the former owner, and the team.

Then, there are more subtle preferences. I tend to ask many questions, have many hesitations, and explain myself with the written word rather than verbally. I have hard boundaries, and little patience for someone asking me the same question multiple times.

Of course, we should always be aware of these styles and quirks in ourselves and others. And, after running a business for a few decades, I feel confident of my leadership and communication skills, but selling a small business calls for a deeper level of skill. Even small gaffes feel very magnified in delicate negotiations.

Recognize who holds all the cards

It took me until two days before closing to realize this: I was holding all the cards.

For decades, I’ve been a nationally recognized author and expert in my field. I had built a solid business, a solid team, and attracted thousands of followers and fans. If a prospective buyer wants to buy my business, there’s only one owner to approach: me. But if I want to sell my business, I can approach many potential buyers.

This is the key to being direct in your communication, sticking to your guns and boldly asking for — and getting — whatever you want out of the deal. It also empowers you to walk away if it just doesn’t feel right.

I’ll say it again. You hold all the cards.

Lessons from selling my small business

As I said at the top, I am happy with the results from selling my small business. But just because the results are good doesn’t mean the process was perfect. If you’re embarking on a similar journey, see if my lessons learned might help make your process smoother. I wish you all the success I’ve had, but with fewer headaches!

What other questions do you have about selling a small business?