We’ve all heard the chatter (or read about it in this blog). The owners of family businesses need to start thinking about their exit strategy. To put it in perspective, Robert Nason of John Molson School of Business reveals that “the retirement of baby boomer business owners will bring about the largest turnover of economic control in history.  … In Canada alone, an estimated $1.9 trillion in business assets will change hands, affecting some 3.5 million jobs and 27% of GDP.” This is not a drill! Many claim the answer to the retirement dilemma is estate planning, but what if continuing the family legacy simply isn’t in the cards?

One simple option is to do what may come naturally: sell. Selling your business can be lucrative for both parties involved. Your business will live on and you may walk away with a handsome reward. The buyer won’t have the tough start-up costs associated with building a business from the ground up. Like all things in business though, you need to know a few things before going down this path.

Justin Farmer, President of a Seattle-based business consulting and brokerage firm, Private Practice Transactions, details some factors to consider when mulling over the sale of your business. He cautions to start earlier rather than later. One approach is to groom an established employee to take your place. You might need to assume the risk that your protégé won’t work out, leaving you at square one. Hiring, vetting, and grooming the right employee candidate can take years.

Another approach is to sell the entire business outright. Here, the buyer may need to find a lender or ask you to carry a promissory note for a portion of the purchase price. Once the money is found, it may still take the insurance underwriters a month or two to finish the paperwork.

These options still don’t even scratch the surface of how long it might take to sell a business. An appraiser (or two) may be needed to establish the fair value of the company, particularly if there are minority shareholders to satisfy. Consultants, brokers, and attorneys should be brought in to provide the clear plan and paperwork necessary to facilitate the deal. Good things take time, and selling your legacy wouldn’t be any different.

Farmer also recommends managing public perceptions of the sale. A common fear in the sale of a business is that clients will flee when the reins are turned over. However, a carefully crafted communication will present the sale as a positive move for the business, satisfying the client and guaranteeing the longevity of the business for the new owner. These communications are mandatory in some transactions, such as the sale of certain professional practices, so it’s better to make the communication work to your advantage. Any such message could be the final communication before you contently ride off into the sunset and the new owners proudly takes their seats at the throne.

Keith Baldwin is a business transactions and securities lawyer with a forty year history of serving clients’ legal needs. Keith focuses his practice on business relationships, including mergers and acquisitions, agreements among owner-entrepreneurs, and best practices for corporate governance. Keith can be reached via email at keithbaldwin@dwt.com or directly at 425.646.6133.