Prepare for Sale

Prepare Your Business for Sale

Deciding to sell your business is an emotional decision, then you need to prepare your business for sale. Once you decide selling then it is time to make the move – assuming all decision makers are on board with this decision.

Following critical steps are pertinent to prepare your business for sale:

  1. Align Organizational Objectives: Align goals and objectives for executing the strategy to maximize the chances of success, requiring a clear articulation of these objectives by management.
  2. Develop a Exit Plan: Once the sales objectives have been articulated and buy-in obtained, its critical to begin to plan the tactical steps necessary for management to execute the strategy.
  3. Assemble a Team of Advisors & Deal Specialists: After strategy and the internal team is in place, the detailed planning process has begun in earnest. Despite the Management team’s dedication and diligence, there likely remain areas where the shareholders need the benefit of outside functional expertise.
  4. Get Your Books and Records (Financials) In Order: Any potential buyer will undoubtedly pay a great deal of attention to the financial results the company has achieved over the past few years. Owners can expect a buyer to scrutinize historical performance to better understand the risks and rewards associated their potential investment. Steps can be taken early in management’s sale process to better facilitate this analysis and provide a potential buyer with added comfort with regard to the historical financials.
  5. Develop Quality Financial Projections: To maximize the value of a business in a sale, it is critical that management provide the potential buyer(s) with a credible, compelling story of future growth opportunities and profitability.
  6. Understand the Subjective Value of Your Business: By better understanding a potential buyer’s philosophy and attitude towards what drives value, a seller can begin to understand how this philosophy might apply to attributes of your business. These value drivers will vary from buyer to buyer.  Some of these drivers will be objective, some subjective —it depends on the unique buyer and what is expected from the transaction.
  7. Identify Potential Acquirers / Understanding Process: Part of the process of understanding the concept of subjective value will be to begin to identify logical fits and potential acquirers for the business. What has driven past consolidation? Who are the participants? What appears to be the prevalent expansion strategy?
  8. Evaluate Deal Structuring Alternatives: Deal structuring, tax structuring, and financial engineering can produce significant value within the context of a transaction. Often, creative structuring can prove to be the difference between closing a transaction and sending everyone home empty-handed. The earlier a company begins to understand the implications of various structuring alternatives, the better prepared they will be as the specifics of the deal begin to materialize and negotiations heat up.
  9. Review Transaction Objectives and Priorities: Evaluate what is learned to-date during planning process and compare to objectives articulated at the onset of the planning process. This exercise will better align expectations and priorities as the process continues.
  10. Determine Sale Timeline and Execute: Assuming shareholders remain committed to continuing the sale process at the conclusion of the planning phase (i.e., timing and market is favorable), an execution plan should be developed. 

Here is what you DO NOT want to do…

  • Tell anyone that you are going to sell – confidentiality is of utmost importance
  • Change the business models or daily operations
  • Take cash out of the business that will alter subsequent financial statements

If you would like to discuss the sale of your company, please contact us with your business information.

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