Questions to Ask Before You Sell Your Company

I spend a lot of my time on the buying side of the table. Creek Equity founds, funds, and acquires businesses in Michigan, so I meet many owners who are starting to think about what comes next. Most of them have spent twenty or thirty years building something. Many have never sold a company before, and they will only do it once.

The first question almost every owner asks is what the business is worth. That is a fair question. It should not be the only one. Here are the questions I would want answered if I were the one selling.

Why am I selling, and why now?

Start with yourself before you start with buyers. Are you ready to stop working, or do you want to keep running the business with a partner? Do you need all of your money out now, or would you keep a stake and share in what comes next? Is there a family member or a manager who wants to take over?

Each answer points to a different kind of buyer and a different kind of deal. Owners who are clear about what they want tend to get it. Owners who are not tend to end up with whatever the first serious buyer proposes.

Who is the buyer, really?

Buyers are not all alike. A competitor may want your customers and not your building or your team. A fund may plan to sell your company again in four or five years. A family office or a private investment company like Creek Equity may plan to hold it for much longer.

Ask every buyer the same things. Where does your money come from? How long do you usually own a company? What did you do with the last business you bought, and can I call its former owner? A good buyer will answer plainly and give you names.

What happens to my people?

For many owners this matters as much as the price. Ask what the buyer plans for your managers and your employees in the first year. Ask whether they intend to move the business, combine it with another company, or change its name. If the plan includes cuts, you deserve to know before you sign, not after.

Pay attention to how a buyer talks about your team in the first meeting. Buyers who ask about your people by name usually plan to keep them.

What happens to my customers?

Your customers chose your company, often because of you. Ask how the buyer plans to introduce themselves, whether prices or service terms will change, and who will own the most important relationships after closing. A rough transition can cost a business customers it took years to earn.

How much of the price is actually cash at closing?

Two offers with the same headline number can be very different deals. Some of the price may be paid later, depend on future results, or come back to you as a loan to the buyer. Ask how much is paid at closing, what has to happen for the rest to be paid, and who controls the decisions that affect those payments.

This is a place to have your own accountant and your own lawyer, people who work for you and have seen these terms before.

What will my role be afterward, and for how long?

Most buyers want the owner to stay for a period after the sale. Get specific. What will your title be? Who will you report to? How long is the commitment, and what happens if it is not working for either side? Owners who expect to be in charge and find themselves taking direction often have a hard first year.

Is the business ready to be sold?

This is the question owners like least, and it is often the most valuable. Could someone else understand your numbers without you in the room? Are your contracts with key customers and suppliers in writing? Does the business depend on you for most of its sales or its decisions?

Fixing these things takes time, sometimes a year or two. It is worth starting early. A business that runs well without its owner is easier to sell, and it is usually worth more.

A final thought

Selling a company is a financial decision, but it is also a personal one. The right buyer is the one whose plans for the business you would be comfortable watching for the next ten years. Take the time to ask the questions, listen closely to the answers, and choose the buyer you would want running the company you built.