The Good News and Bad News of Selling Your Business in a Post-Corona World.
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Don’t Be Too Hard on Yourself

Lizzy (not her real name) called me last week to talk through her strategy to sell her business. She told me how she started the business in 2002, then she began to describe its current problems.

I quickly figured out there was way more going wrong in the business than going right. But almost on a dime, she stopped and asked, “Ok, so what is a business like mine worth?” I have to admit, her question caught me by surprise. She was describing her problems in a way that led me to believe she already knew her best decision would be to simply close the business. So, the only way I could answer her question was to ask her a question, “You know this industry well, how much would you pay for your business?

Lizzy has good instincts; she knew my question was my way of telling her the business didn’t have much market value. In fact, finding a buyer at any price, given the problems she described, would be like finding a needle in a haystack. As the old saying goes, “it’s hard to catch a falling knife.”

But she provided one detail that gave me hope. Lizzy owns the building in which her business is located. She told me she had always hoped to sell the business to someone who would also lease the building from her. She called that idea “my retirement plan.” But as we talked through the business issues, she realized she wouldn’t be able to find a buyer for the business, likely at any price. Let’s just say no buyer in their right mind would want to inherit the issues she was experiencing.

So I gave Lizzy the obvious advice, why not close the business as efficiently as possible then sell the real estate? While this is logical, left-brain thinking, I realize that, to most business owners, this sounds like defeatist thinking. But in a growing market like middle Tennessee, there are lots of baby boomer business owners who may not have much transferable value in their business but have substantial value in their real estate.

So as you are planning your retirement strategy, don’t be discouraged if your only transferable value is coming from the real estate in which your business has been located.  Sometimes winding down the business and selling the real estate is a great strategy, if not the only strategy.

 

 

JIM CUMBEE is President of Tennessee Valley Group, Inc. a retainer-based business brokerage and transition mediation firm in Franklin, TN. Cumbee is an attorney and has an MBA from Harvard Business School. Jim is the author of Home Run, A Pro’s Guide to Selling a Business. https://www.amazon.com/Home-Pros-Guide-Selling-Business/dp/1599329239 .  He has a wide range of corporate and entrepreneurial experiences that make him one of the most sought-after business transition advisors in the state of Tennessee. The principles above are true, but the story, names and fact patterns are changed to preserve the parties’ identities.

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Tennessee Valley Group

Jim Cumbee established Tennessee Valley Group to help business owners fulfill their dreams for life after business ownership. It’s a mission that his 30+ year career history had prepared him well for—in addition to being an attorney, transition mediator and business broker, Jim has been a buyer, seller, and entrepreneur. His broad range of experience gives him unique insight into how business buyers and sellers can achieve their goals.

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