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Know When and How to Sell Your Business Experts say selling a business takes just as much thought and effort as starting it.

By Andrea Murad Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.

John West is a serial entrepreneur in the truest sense. Prior to his latest startup, he had already built and sold two companies in very different industries. And he says that while developing an idea to start a business takes time, selling that same business is just as complicated.

West started building Whistle Sports Network in 2008 after selling his second company, Silver Oak. After the Silver Oak sale, he decided to spend time with his children. As his children started watching sports, he started to notice that the media coverage, content and delivery weren't geared toward younger generations. West started to research the media industry and decided to launch a linear cable network. Today, Whistle Sports has 315 channels and 115 million aggregate fans and followers.

During a sale, business owners have key financial and emotional considerations, like figuring out what to do once they don't own that business and developing a personal financial plan. While the lump sum from a sale can be life-changing money, it's secondary to the work as an entrepreneur, according to West.

"I've never believed you should start a company to sell it," says West. "You start a company to solve a problem and do something cool. You sell it based on how the markets are doing and how the industry is doing -- you can't plan this."

Related: The 6 Types of Buyers for Your Business

Nadia Allaudin, senior vice president of Wealth Management at Merrill Lynch Global Wealth Management in Century City, agrees and says that "there needs to be an understanding for the impetus for the sale or walking away. There needs to be a lot of conversations about how you're going to handle this."

Once a business owner receives an offer, whether expected or not, that's when the planning begins.

Buyers can be anywhere.

West started his first company, Enstrat, an environmental consulting firm, out of college in 1989. Soon after graduating Harvard Business School, he sold the firm to a member of his managerial team in 1996 because he wanted to make a change.

"The business was profitable, so we were able to finance the sale through debt," says West.

Many companies are sold to key employees since these people know and understand the business and have a passion for it.

"Entrepreneurs should think about that when they're hiring people and consider grooming employees, since they may be the people to take over your business in a few years," says Tim Sabol, private wealth advisor at Ameriprise Financial in Philadelphia.

In 1999, West went on to build Silver Oak, a company that helped state governments save money. His company created a niche and was earning about $23 million in revenues. After eight years, he accepted an offer from CGI in 2005. Three years later, he started Whistle Sports. Deals can take up to a year or two to close, which can be used to plan for what's next.

"Most of the time, how long [a sale] takes hinges on who the buyer is -- if it's an internal candidate or a competitor down the street -- and it always seems to take longer than people expect," says Sabol.

Prepare for the exit.

Leaving a business requires understanding the business's value and worth. You may need multiple valuations depending on the buyer, nature of the business and the deal. Having clear books and records helps a buyer with due diligence, and you want to have years of financials readily available so you're prepared for that unexpected offer.

"There are a lot of different business valuations companies, and you want to find one that's reputable and specific to your industry, so they know your business and the cash flow," says Laurie Barry, wealth advisor at UBS Financial Services in Chicago.

Related: Use Make-a-Will Month to Plan Your Small-Business Exit Strategy

Negotiate your responsibilities.

As part of the Silver Oak sale to CGI, West stayed with the company for 18 months to manage the integration of Silver Oak into the bigger business and work on special projects.

"A lot of times, the company wants you there to shepherd your old employees into the new system," says Sabol.

If you're asked to stay, inquire about the length of the commitment and the expectations of that position since this will affect your future plans.

"Make sure you understand what those parameters are," says Barry. "If you don't want to stay on, what are the ramifications of those as well. That's really important for the business owner."

Create a plan for your finances and time.

What you plan to do with your time and how your life will look is as important as the financial aspect of leaving your business. After selling Enstrat, West moved to New York to work as a management consultant. When that firm was sold, he then started Silver Oak.

"I knew I wanted to do something on my own, so I came up with the idea for Silver Oak on napkins and planned the budget for the company," says West.

After selling Silver Oak, since he had started a family, he put half of the sale proceeds towards college funds and his retirement. Once he started Whistle Sports, he invested the rest into the seed round. He also had to budget for the years that he didn't take a salary along the way. For many serial entrepreneurs, what's next isn't to just go sit on the porch, at least not for a long time. And it's tempting to use the entire lump sum for a new business.

"Do some analysis to figure out how much of the proceeds you should set aside for retirement, and with the balance of the proceeds, think about how much you can risk for the next deal," says Sabol.

While some business owners have a vision for what to do next, others may decide to take some time to figure out next steps. If you don't have a plan, rediscover strengths and build your network to make a transition into something new easier. Be sure to budget for these expenses, since just rolling with it often doesn't work.

"When you're an entrepreneur, it defines a big piece of your identity, and when that goes away, it's definitely a transition," says West. "I didn't appreciate that after selling the first company, but you have to find something else to focus on."

Don't ever go it alone.

"Find a good set of advisors who you work well with and can give you great advice," says West.

Corporate accountants, lawyers and investment bankers can help shepherd your company through a sale, and a personal accountant and attorney can assist with your personal financial planning when you do receive that lump sum. Build a team of people who commit to your business like you do because as an entrepreneur, these people will help determine your success.

"If you surround yourself with capable people with different strengths and weaknesses, you can get around any obstacle," says West. "That sounds sort of cliché, but it's the absolute difference."

Related: This Guy Sold His Startup for $575 Million in Cash -- And Gets to Keep Every Penny

Andrea Murad

Writer, Journalist, Storyteller

Andrea Murad is a New York-based writer. Having worked on both Wall Street and Main Street, she now pursues her passion for words and covers careers, investing and money.

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