Many small and mid-sized business owners who have decided to sell their business have no prior experience in that process. Obviously you will want and need to seek the advice and counsel of someone experienced in mergers and acquisitions.  Before you do that, however, here are a few things to think about.

Where is the real value in your business? It is often not the machinery and equipment. Those things are fungible and can usually be easily acquired or replaced, unless they are quite unique or the way you have combined them and/or used them is unique. It is sometimes in the employees, but only if they have special skills, experience or knowledge that is not easily replaced. It can be in the customers and the revenue stream they produce, especially if it is monthly recurring revenue from customers that are not readily transient, i.e. under written contracts. Most often it is in you, the owner. It is your special relationships with the customers, your business reputation or the special talent or knowledge you have that you either have not, or cannot, pass on to others. If that is the case, your exit from the business after the acquisition will decrease the value of the business to a potential buyer. Identify the real value and focus on how that value can be transferred to a new owner.

Who are the potential buyers for your business? If your business is unique or a “niche” business, the market of potential buyers may be limited to your competitors. Many business owners do not really want to sell to their competitors, which can severely limit the number of potential buyers and/or the value of the business, if not make the business virtually unsaleable. Obviously, the more potential buyers, the greater the price that your business can bring. Evaluate the market and create a list of potential buyers. Then you can adjust your sales efforts to optimize your success.

How can your business be made more salable? Start with your overhead and cost of goods/services sold. Identify where you can reduce costs that will increase profit margins. Doing this before a sale will bring a better price because the buyer will not have to address those issues after the sale. For many owners that is very difficult, especially if it involves cutting the workforce.

What is a realistic asking price? Many business owners, especially those who have started their business from scratch and grown it to be successful, have a natural emotional bias that leads to an unrealistic sense of the worth of their business. Independent business valuation specialists are readily available, but shy away from having anyone value your business who is going to be involved in the marketing and sale of the business, such as business brokers.

Be prepared to negotiate. Remember that the asking price is merely a starting point. It is rare that a buyer will accept the asking price, unless it is set too low. Most buyers expect and want to go through a back and forth discussion to address their points of concern and how your business will fit into their model.

Be prepared to share your information. Even though most buyer “due diligence” occurs after a purchase price has been established, most buyers will want to see some basic information about your business - starting with your financials - before the price is set. Many business owners are reluctant to share that information. Proceed with some caution, however. Make sure there is a written confidentiality agreement in place and never divulge the actual identity (names and addresses) of your customers until the deal is sealed with a binding purchase agreement.

We Americans value the freedoms and rights that living in this country provide to us. Two at the top of my list are freedom of speech and the right to privacy. If you believe that our government, and especially our highest elected official, the President, should be safeguarding those rights and freedoms, you may be a little concerned about an official press release from the White House Director of News Media encouraging citizens to report “fishy” speech opposing the Administration's health care initiative to a White House email address.

On August 5, Senator John Cornyn of Texas wrote a letter to President Obama decrying this “program” and asking the President some very direct questions on what the White House intends to do with this information. To view this letter, go to Senator Cornyn's website at http://www.cornyn.senate.gov/.

Let me tell you about a client of mine who was in charge of a division of a mid-sized public company. When he first became my client he invited me to sit in on his weekly staff meeting, where each of his department heads went through the things their departments were dealing with - problems, projects, strategies, etc. Just before the first meeting I attended he told me “Look, this is an open discussion. Nothing is off limits. If you hear something you don't agree with or think is going in the wrong direction, or if you have a better idea or think something is being overlooked, I want you to jump in. And I am not just talking about legal advice or legal issues; I am talking about anything and everything.”

I was a little surprised, so I asked him “Are you saying you want to hear my thoughts on non-legal matters? I don't want your department heads to think that I think I know more about their areas of expertise than they do. Or that I am sticking my nose where it does not belong.”

“No, no”, he said. “Everyone on my staff understands that this is how we do it and they are fine with it. I have carefully picked my department heads for not only their talent and experience in their particular area, but also based on their various personalities and life experiences. I have purposely put together a group of people who have different perspectives on things, different approaches, different points of view. By hearing many different takes on an issue, I believe I can make a better decision, and so can my department heads. And as an attorney, you are trained and experienced at identifying potential problems or risks, analyzing issues and evaluating responses, so you bring another, totally different perspective to the discussion. You will see things that no one else around the table sees.” And he was right. The dynamics of the meetings was incredible, my thoughts and ideas were welcomed and his division was very successful.

That client went on to become the CEO of a 6 billion dollar public company. He has been very successful in every business enterprise he has been involved with and I believe that a significant factor in that success is that he understands and appreciates the value of perspective.

The relationship between attorney and client is like the relationship between husband and wife. there has to be mutual respect. there has to be a commonly shared objective and there has to be trust. Just like in a marriage, if those factors are in place, the relationship will be successful and long lasting. My practice, in fact my entire legal career, has been dedicated to establishing those factors with my clients