Selling Your IT Business
You’re mulling over the idea of selling your information technology business. Do not jump in without carefully thinking it through, assuring that this is the right time. After all, you don’t want to jeopardize ruining something that you’ve put your blood, sweat, and tears into!
There’s no right or wrong reason, each person is different. Maybe your reseller web hosting business is not at all profitable anymore, or the opposite is true and you have offers left and right from prospective buyers. Whether you are looking to spend more time with your family or are planning to start a new cloud hosting venture, the process of selling your business is the same. Here’s what you need to think about before you make your decision to sell, assuring you don’t act at the wrong time.
Take A Look At The Market
A good way to judge whether or not it’s time to sell is to take a look at the market as a whole. Generally, in the technology market, it’s tough to predict the future. You just don’t know when a competing product or service will be developed or when the market has hit saturation. If you notice a dramatic upswing in sales or a slew of competition appearing on the horizon, it might be time!
How is your company doing? If you’re just starting out, it might not be wise to sell. If you are a top web hosting company in the IT world, it makes sense to stick around for a while longer, unless you are given a sizeable offer that you just cannot see yourself saying no to.
If your business is growing fast, great! If you do the math of projected share value for five years from now based on the growth of your business, you might be wise to hang onto those shares for the time being. It’s like selling a plow truck in the summertime: you’ll likely receive more money in the winter, when it is in demand.
Make It Personal
Since this decision is going to impact you in a big way, you’d be unwise to overlook just how big of an impact it could make. Is this your only asset? If so, it makes your decision more important than ever!
Ask yourself a few important questions, starting with a simple one: what are your motivations for selling the business? Will you be financially secure after selling the business? Are you doing it for the sake of the business itself, or do you just want to wash your hands of it altogether?
Another important consideration: how will it make you feel to walk away? Even if you think you’re more than ready, your subconscious could cloud your judgement with emotion when it comes time to talk to potential buyers. After all, you built this business into what it is today. It’s like sending your child off to college: you are proud as could be that they have reached this stage in their lives, but you’re so very scared for their future.
Are you prepared for your own future, either working on a consultant basis or retired, with nothing to do? After working so very hard to build the business, it’s hard to just stop and sit. Plan for these events: if you plan to stay with the company in some form, prepare yourself to report to a boss; if you will not be working, plan what you’ll do with your time.
What about your family? Were they planning on taking over in the future? How will they feel about this decision?
Sell, Sell, Sell!
If you have considered all of the factors outlined above and reach the decision to sell, there’s a bit more work ahead of you. You’ll want to contact a professional to appraise your business. Businesses in the technology field are hard to gauge on your own, and you don’t want to shortchange yourself.
Don’t forget to review your employee and contractor agreements for information regarding ownership of intellectual property. The buyer doesn’t want to get stuck with a lawsuit from these contractors in the future after the sale is finalized. Due diligence will alert them to this prior to the sale most of the time, which might cause them to back out altogether. It’s best you prepare for it on your own, so go through all agreements so that you can disclose the information to the buyer yourself.
The technology market is tough when it comes time to sell. You never know when the next big thing is going to come along, making your product or service obsolete. It’s important to think this decision through, and talk to a professional so that you don’t wind up losing money in the deal, after spending a lifetime making the business what it is today.