I've run a small manufacturing shop for 18 years and I'm starting to think about selling. Not in a rush, maybe 2-3 years out. But I don't know where to start. What are the basic steps to make an exit smooth? I keep hearing about getting books in order, but what else actually matters? Looking for practical advice from people who've been through it, not textbook stuff.
Exit Planning
Basic steps for a smooth business exit
First thing I'd do is get a proper valuation. Not a free online calculator, but someone who knows your industry. You need to know what you're actually selling before you can plan an ything else.
Clean financials are non-negotiable. I spent two years getting my books audit-ready, and it made the whole process way less painful. Buyers will dig into everything, so surprises kill deals.
Don't forget about your team. If key employees leave during the transition, the business loses value fast. Some buyers want you to stay on for a year or two just to keep things stable.
How much does a valuation usually cost? And do you need a broker or can you sell it yourself?
Valuation can run a few thousand depending on complexity. Brokers take a percentage, usually 8-12% for smaller deals. Selling yourself is possible but you'll spend a lot of time screening tire-kickers tbh.
Also think about timing. The market matters. If your industry is hot, you might get more. If not, you might need to wait or adjust expectations. I sold during a downturn and regretted not waiting a Year.
Legal structure and contracts. Make sure your customer contracts are transferable, leases are clear, and there are no loose ends. I had a handshake deal with a supplier that almost derailed my sale.
Get a good accountant and a lawyer who've done M&A before. Not just your regular guys. The cost upfront saves you from disasters later.
What about taxes? That's the part I'm most worried about. Capital gains, depreciation recapture, all that.
Definitely talk to a tax advisor early. The structure of the salee (asset vs. stock) can make a huge difference in what you actually keep. Don't leave it until the last minute.