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Ask HN: How do I sell my business?

7 points by saltcod ↗ HN
I've got a friend (no, really) who owns an office equipment business. He has about 5 employees and has a recurring income of about $30-40k per month. If he sells more, he can make more, but that $30-40 comes from existing contracts.

Problem is: he wants to retire, but doesn't know how to sell the business. If he puts an ad in the paper, three things will happen:

1) his competitors will start hounding his customers and slowly eat away at them, and

2) his customers will probably get spooked, realizing he's closing and eventually move to competitors on their own

3) his employees will probably leave

The company is worth something. He's got a long history, with many original customers and a solid recurring revenue. How can he put the business up for sale without disclosing what the business is and scaring away his existing customers?

10 comments

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mrfusion
What is office equipment exactly and how can it pay that much?
sjs382
Hell, lightly-used/reclaimed office furniture can pay that much. :)
mrfusion
How would a business like that work? You buy a warehouse and then buy up old office furniture? then find places to market it?
jpetersonmn
I used to work for office furniture companies when I was younger, it's a very profitable business. The place I worked for bought and sold, primarily used, furnitures. (cubicles, etc...) When businesses go under the actual cubes are the last thing anybody is really worry about and they can sell for as little as a $5-$10 per cube. The person buying them has to send guys to take them down, load them on a truck and bring the back to the warehouse. The refurb team cleans and puts new fabric on them if needed, etc...

People that are wanting to open a new office, or expand one they already have and go cube shopping. First they go online and are blown away by the cost of new cubes, then they find these dealers. Even a used cube still can cost a couple grand. It's a lot of overhead and the business isn't what it used to be, but still pretty profitable if managed well.

I remember when I used to work with office furniture, I remember how I wished I worked in a cube instead. Went to computer school and now spend my days day dreaming about not working in a cube. (I actually work from home during the summers, but that's almost over.)

mrfusion
I think you raise some really good points about the risks of listing it for sale. Perhaps it's worth talking to a trusted business broker? They might have ways to sell it discreetly?

Another idea, perhaps he could sell it to the employees?

BTW, could you shoot me an email with a few details? Mostly for curiosity's sake, but you never know.

lifeisstillgood
"business brokers" exist almost solely for this very reason - acquiring quiet offers for a business. Find one with recent sales in your geographic / industrial area.

However afaik the business equipment / stationary world is a hard and low margin one, so I suggest your friend starts to prepare - clearing out small debts, tidying up paperwork, having a "sellers pack" prepared with all usual questions answered, reviewing employee contracts and pay scales, just house keeping in short.

Also it's worth looking to see if you can attract the attention of companies likely to acquire - do you have a local delivery or knowledge advantage? What major chains are sniffing round your existing clients - they alone would be worth talking to - always much nicer to buy a guaranteed contract than spent years on a sales force approach.

mrfusion
Or perhaps a company looking to vertically integrate? Delivery companies, moving companies?
JSeymourATL
Selling a business involves a lot prep work. Here's solid overview from the NY Times> http://www.nytimes.com/2010/01/07/business/smallbusiness/07g...

Possible Option: Depending on the sophistication level of his employees, one or more could step-up as a potential buyer. Your friend could structure favorable payment terms. He gets checks monthly over 3-5 years. Win-win.

zomg
one option that is common with small business owners is to approach an employee of the company about buying the business.

there are lots of ways to structure such a transaction. a common way is seller financing, where the seller receives a small down payment, in kind, on the purchase price. the balance due is then paid monthly (or quarterly) to the seller over some period of time (with or without interest, depending on the contract).

ether way, an attorney should be used to draft the contract and make sure all possible "gotchas" are covered (ex. the business goes bankrupt during the payment period). a lien on the buyer's home or other valuable asset is commonly used to protect the seller during the repayment period.