| p>Business owners should regularly consider the | | | | There are many possible trigger events for |
| question: "Is my/our business ready for sale?" | | | | consideration in buy-sell agreements. Common |
| That naturally leads to another question: "When is | | | | events include the following in the lives of |
| the ideal time to sell my/our business?" I can't | | | | shareholders and/or your company: |
| answer the first question for you without more | | | | - Quits |
| information. But I can answer the second one. | | | | - Fired |
| The ideal time to sell a business is when 10 | | | | - Retires |
| conditions are present. The 10 Conditions | | | | - Becomes Disabled |
| Necessary for Ideal Business Sales are: | | | | - Death |
| | | | - Divorce |
| 1. Sales are rising | | | | - Bankruptcy |
| 2. Profits are improving, with margins increasing or | | | | Many times, buy-sell agreements are written |
| stabilized at sustainable levels | | | | under the assumption that the death of a |
| 3. Capable management is in place | | | | shareholder is the most likely trigger event. In |
| 4. The balance sheet is reasonably financed and in | | | | fact, it is the least likely event that will launch your |
| good position | | | | agreement into operation. A quick look at the list |
| 5. The company outlook is favorable | | | | above will confirm the common sense basis for |
| 6. Its industry is hot | | | | this statement. |
| 7. The stock market is rising | | | | The operation of buy-sell agreements occur inside |
| 8. Low cost financing is available | | | | and alongside business-related cycles and the |
| 9. Irrational buyers abound | | | | factors related to readiness for sale. As long as |
| 10. The shareholders are ready to sell | | | | you own a business or a significant interest in one, |
| (shareholder readiness can relate to personal | | | | the corporate, industry, market, and financing |
| estate planning, personal objectives, management | | | | cycles noted above will be in operation. |
| succession in place, and a host of other factors) | | | | Superimpose on those cycles the additional |
| The ideal time to sell a business is when all the | | | | uncertainties pertaining to future events for your |
| above factors are in alignment. An ideal sale is one | | | | shareholders. No one knows when or who will die. |
| which reaches the highest possible price in the | | | | No one knows if or when they will become |
| market when all the factors are in alignment. | | | | disabled. You probably don't know the status of |
| If these factors are not lined up, the goal upon | | | | personal estate planning of all your other |
| sale is to achieve the highest possible price | | | | shareholders. All you know is that you are, if you |
| available in the market at the time of sale. | | | | are like many of us, procrastinating in taking care |
| Common sense suggests that continuing alignment | | | | of one or more of your own important planning |
| of the 10 Conditions does not happen in the real | | | | issues. |
| world. For example, when things are going well in | | | | All the factors relating to when a buy-sell |
| the business, the industry in which it operates | | | | agreement will be triggered are not known all the |
| may be faltering. And when things are going well | | | | time. Therefore, the inevitable conclusion is that |
| with the industry, the stock markets may be in | | | | the ideal time to be sure that your agreement will |
| the doldrums and financing may be tight. | | | | operate reasonably and leave you, the other |
| These facts lead to an inevitable conclusion - that | | | | shareholders, and the business in reasonable |
| the best time to get your business and the | | | | condition is all the time. |
| shareholders ready for sale is all the time. This is | | | | For many, if not most business owners, the |
| the only reasonable strategy that will maximize | | | | investments in their businesses are the biggest |
| the sale price if, and when, you need or desire to | | | | single asset on their balance sheets. Buy-sell |
| sell your business - no matter if the stars are in | | | | agreements create many more opportunities for |
| alignment for the ideal sale or not. | | | | shareholders to (have to) sell and for businesses |
| But, now you ask, "What's this 'ready for sale' | | | | to buy pieces of the rock than opportunities to |
| question got to do with buy-sell agreements?" | | | | sell the entire thing. In order to provide reasonable |
| Well, just as you cannot know or control when all | | | | resolutions at unexpected sales or at unexpected |
| the factors for an ideal sale will be present, you | | | | trigger events, it is necessary to focus on |
| also cannot know or control when your | | | | business readiness and how your agreement will |
| agreement will be triggered. | | | | operate all the time. |