For Sale By Owner

Keeping It Quiet

Screening potential buyers is especially important when you don't want your employees to know the shop is for sale. A broker can guarantee that only serious buyers will visit your site and can ensure they'll sign confidentiality agreements before those visits.

Is the cloak-and-dagger routine necessary? Absolutely, the experts concur. "No one else in the company needs to know you're looking for a buyer," Lipman says. "There is no advantage to telling the employees beforehand." Tell them, he says, and you risk seeing them jump ship, possibly taking important customers or suppliers with them. Even if they stay, they'll be understandably antsy about the future and distracted from their work.

"If I'd told my staff members, their anxiety would not have been good for the business and I'd have less to sell," Lautens says. "So I waited until I could tell them I'd sold it to a great guy."

Oziran once sold a business to one of his employees and knew he was taking a risk. "If I had found out he didn't want to buy or couldn't, I couldn't have stopped him from letting word get around that I was selling," Oziran says. He suggests sellers who want to take this risky route protect themselves by investigating the employee's finances and interest in entrepreneurship as thoroughly as possible before broaching the subject.

Merkin says this closed-mouth policy should extend to suppliers and others outside the company, as well. "If they've been depending on you and you tell them you want to sell, they'll be less likely to rely on you, and there goes your business's value."

Finally, Sanders cautions business owners against indulging in the fantasy that they can sell the business for a heap of cash and retire to a beach somewhere. He finds that about three-quarters of the transactions listed in Bizcomps involve some form of seller financing. "People need to get rid of the idea that somebody's going to walk in and cash them out," he says. One important effect of seller financing is that it encourages the seller to stick around and provide training and other consultation services while the new owners get going, which helps keep the business successful.

But, as Lautens found, hanging around can spark a new round of fun. "I'm doing the framing I love," she says happily, "and I have none of the worries of business ownership."

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This article was originally published in the January 1998 print edition of Entrepreneur with the headline: For Sale By Owner.

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