By Tony Ferraro, Managing Director Commercial Lending at Bridgewater Bank

First, you had the vision. Then, you brought your company to life, nurtured it, and helped it grow. At times, it probably felt kind of like a child to you. You put your passion, time, money, and effort into your business, and you have the years of challenges, accomplishments, and memories to show for it. Eventually, though, you reach a point where you realize it’s time to step back, whether it be due to retirement or other personal reasons.

While some are in a position to hand down their business, others opt to sell. We understand that deciding to sell a business you created is a difficult decision to make. After all, as entrepreneurs ourselves, we know the pride you have for your own company is unmatched. This is all the more reason that if selling is the right move for you, you deserve a smooth and successful transition.

So, how do you go about doing so? We’ve helped countless clients navigate the challenges of selling their business over the years, and if I’ve learned anything, it's that there is a lot you can do on the front end to make it a smooth transition:

Start Planning Years in Advance

Begin planning for a sale at least three years out. Meet with a banker to assess your finances, ensure you have the right operations team in place, talk through realistic buyers and set up a plan to shore up any gaps.

Consult a Banker Before Making Promises

Sit down with a banker first before promising the company to anybody to ensure it pencils out financially. This is a common mistake that can be easily avoided.

Be Ready for Changes to the Balance Sheet

Pay special attention to the ways an acquisition will affect the company’s balance sheet. A sale creates a significant change to a company’s finances, and your organization needs to be ready to take on the debt in most cases.

The right banking partner will help you understand what a potential buyer may be able to realistically pay for your business and what may be asked of you.

Understand SBA Options

If your company might not meet the collateral or leverage requirements of a bank, one way a bank can help mitigate the shortfall is by utilizing a Small Business Administration (SBA) loan. This provides some added guarantees to help fill some of the underwriting gaps.

To set yourself up for success, it is important to work with a well-versed SBA lender, such as Bridgewater.

Seek Pre & Post-Acquisition Support

A good banking partner can help you look for potential financial issues, whether it be through pre-planning for the upcoming sale or post-acquisition support with our dedicated bankers.

At Bridgewater, we take that a step further by leveraging our robust network of professionals such as attorneys, CPAs, and financial advisors, who can help if issues arise.

Selling your business is a decision you may or may not be thinking about at this point. However, in my experience, I can tell you that proper planning makes all the difference. Additionally, working with a banking partner who understands your unique needs and is willing to guide you through the process can make the experience less daunting.

Wherever you are in the journey with your business, we welcome you to stop by to discuss this important, and often not talked about, part of being a business owner.