People make a lot of important decisions in a lifetime—from the furthering of education to a career, a place to live, a mate, children…and somewhere along the way, some may even choose to own their own businesses.
Not everyone aspires to get into the electrical business. Those whose paths have taken them in that direction quickly learn what an exciting and rewarding experience it can be. On top of that, those who have been fortunate enough to have ownership in electrical distribution know that there are ups and downs, and the experience can be both horrifying and exhilarating at the same time. Then, at some point, it comes time to think about selling the business.
There are many reasons for choosing to sell a business, and they are as unique as the individual him- or herself. The good news is that for everyone who wants to sell a business, there is probably someone out there who wants to buy it. In the past, a company had to have $20 million or more in sales just to get noticed, but in today’s market, buyers are open to smaller companies. All that is needed is a plan.
Jerry Nudi, former president and CEO of New York-based Warren Electric Supply, sold his business to US Electrical Services in 2012. “I had been pursued on and off for more than 20 years,” said Nudi. “I knew there was interest in my company. I knew that good times for acquisitions came and went with changes in the economy. I also knew that I needed someone to help me through the process.”
Speaking with family and seeking professional advice, both legal and financial, are critical. Also critical is maintaining a level of confidentiality so as not to panic employees, customers, and/or vendors, which could ultimately damage the future of the business.
The selling process takes time. Planning one tax year in advance can maximize assets and minimize tax exposure. In many cases, the only winner in a poorly planned acquisition is the IRS. Buyers don’t want to buy a business where the owner has been too busy trying to sell and not running the business. A change of focus will show on the financials—usually right when it’s time to close the deal. Also, make sure to take the time to position the company for continued success by fostering strong management.
There is life after selling, so have a personal plan in place as well. On the upside, there will be time to pursue other interests and new opportunities will present themselves. But the impact could be negative too. Those who decline to stay on at the company in some capacity (which in many cases is a viable option) or won’t be taking on another job need to think about things like the lack of a paycheck and health insurance—and even what they will do when they get up in the morning after so many years of heading to work. It is also important to know that some friendships will remain and others will not.
The best advice: Listen to the people who have been through the process; their insight is well worth consideration.