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updated: 2/4/2013 8:20 AM

Is this the year you can finally sell your business?

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After way too many years of waiting -- for the economy to improve, for banks and investors to loosen up, for buyers to appear -- you figure this is the year to sell your business and move on.

But two knowledgeable business brokers warn that selling a business takes more than just hanging a sign on the door. In fact, says Joe McCaul, "You've made a big mistake if you're just thinking about selling now."

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What the sale ultimately comes down to, McCaul says, "is the transferability of the revenue stream. Any risk there dramatically affects the price." That means sellers typically have work to do.

Among the issues McCaul notes you should have been working on are increasing the value of the business; the tax consequences of a sale; estate planning; and, particularly important, development of a strong management team that will enhance the company's value to a potential buyer.

McCaul is president of Joseph Associates International Inc., a Naperville-born but now Chicago-based business brokerage.

It's not coincidence that business broker Linda Purcell, president of Purcell Associates LLC in Palatine, puts "the situation regarding key employees" at the top of a list of information she says prospective sellers should be ready to share. "Will those employees stay?" she asks. "Is there an infrastructure in place that will handle customers when you leave?"

There are ways to put a team together that will make a potential buyer comfortable about your business' ongoing prospects. McCaul suggests, "stock appreciation rights in place of raises" as an example of "golden handcuffs that make it hard for staff to walk away" when you sell.

The trouble is that such paper equity needs time, which means a plan put in place today won't help if you want to put the business up for sale tomorrow.

Purcell has additional items on her list of information a selling business owner should be prepared to share:

"Do you have a stable customer base?" Purcell asks. "Is it broad, say 200 customers? Or is 87 percent of your business concentrated in one buyer?

"What about your key supplier? If that supplier stopped supplying, could you be forced to shut your doors?

"What's your management style?" Purcell continues. "Why has your approach worked? How do you differentiate your business? How do you treat employees? Is your financial house in order?"

There's more to Purcell's list, but her point is that a selling owner must be willing to provide answers to questions that are certain to be asked. You'll also need good advisers.

"Do not let your mother-in-law do your accounting," McCaul says with a bit of a laugh. But he adds that "There is a price penalty to be paid for poor accounting practices."

You'll also need a transaction-experienced business attorney, and Purcell likes to see "a wealth adviser" on your transaction support team.

• Jim Kendall welcomes comments at JKendall@121MarketingResources.com

2013 121 Marketing Resources Inc.

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