Time to Sell? Weight These Factors When a Buyer Comes Calling.

Time to Sell? Weight These Factors When a Buyer Comes Calling.

Karleen Kos is executive director of the Portable Sanitation Association International. She may be reached at karleenk@psai.org or 952-854-8300.

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A longtime, loyal and engaged member of the Portable Sanitation Association International is late with their dues. Calls to the owner go unreturned. I can usually guess what is going on … and it isn’t that they’ve been snatched by aliens. Typically they are negotiating the sale of their business, something that is verified a few weeks later when the PSAI is officially notified.

Right now there is consolidation going on in the portable sanitation industry. A handful of large players are on the hunt to buy companies — usually they seek firms with strong balance sheets that are the dominant players in their markets. If you own one of these companies, you’ve probably already been approached a time or two. The question is: How will you know when the offer is right?

Before you are blinded by dollar signs and dreams of sipping beverages on the beach, take some time to decide what you want to accomplish with the sale of your company. There are the financial considerations, but there are many others as well.

• How much money do you need from the sale — and how much do you want? Be sure you know these answers and what the difference in your future lifestyle will be if you get the lower amount. It’s also important to be sure everyone in your family who will be affected by the future lifestyle implications is on board with the game plan.

• When do you want to sell? Good financial and succession planning is essential. Assuming you have done both and determined that selling the firm is the right move, timing is everything. If your firm is in good shape, right now it is a seller’s market. If you are carrying a lot of debt — or you have some legal issues hanging over your head — create a plan for resolving those things before you test the sales waters. This will make your company a more attractive prospect, improve your bargaining position, and likely result in more cash for you.

• Know what terms make sense for you. Everyone wants to maximize their after-tax outcome from a sale. Before you start talking to potential buyers, do your homework and know what sort of financial and legal structures are best for you. This is especially true if you plan to use the proceeds from the sale to invest in another business or to fund your retirement. Both of these uses bring a host of possible tax and investment considerations; acting strategically can significantly affect the funds you ultimately keep.

• Think about retention agreements for your employees. The portable sanitation business is built on relationships. Odds are good you have workers whose quality of life matters to you. Think about whether you want their future employment to be one of the things you negotiate and what success looks like on this point.

Above all these things, you must decide what you need from the sale in order to live with yourself. In the end, you are not just selling your company. You are selling your life’s work. Perhaps you will be offered enough money to paper over any qualms you have about how the buyer runs the business, treats your employees or serves your customers. If so, you are lucky. More often, the sort of people who are successful in the portable sanitation business care deeply about all of these things. Do some soul-searching to be sure you know what sort of buyer makes sense for your company and your conscience. Then, when you are hanging out on the beach after the sale, you can feel good about what you’ve accomplished and you’ll still have some friends to hang there with. 



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