Going to market when you and your business are ready to sell and market conditions are right provides the best opportunity to maximize results. Let’s look at how these three ingredients combine:
- You, the Owner
- The Business itself
- The Market
Having these ingredients come together at the same time requires planning. You can prepare personally and you can prepare your company for sale. You can’t control the market, but you can choose market timing. So, basically, it’s up to you to prepare yourself and your business so that you can initiate the sale process when market conditions are favorable.
Are you and your business prepared to sell?
In complex business deals, we achieve more in the end when we use great advisors from the very beginning. Most business transition teams include an experienced M&A broker, valuation expert(s), an accountant with a strong tax background, a business transaction attorney, and a financial planner. Depending on the nature of the business and the type of transaction, other specialists may be needed. An experienced M&A broker can help you form a great ensemble.
Some of the questions that a transition team can help you answer include:
- What is the company’s probable selling price in today’s market?
- Are value drivers and detractors clearly identified?
- How do marketability, goodwill transferability, due diligence survivability, and deal finance-ability measure up?
- Who are the most likely buyers and what deal terms are you likely to see?
- Is cash flow being optimized at this time?
- Does management have good visibility and a clear runway?
- Are you on top of major industry and market trends?
- Will net sale proceeds be sufficient to support your (family’s) desired life style?
- How will your proceeds be reinvested?
- Are you ready for life after business? What are your personal plans?
- Are you prepared to assist in a smooth ownership transition?
- What steps can be taken now to minimize taxes and reduce risk at deal time?
- Is the management team sufficiently committed to the future success of the company?
- Are key employee incentives in place to support a sale?
- Are leases and contracts assignable and attractive to a buyer?
- Is intellectual property properly titled, protected and transferable?
- Are all books and records in good order?
Plan ahead, or plan for less
There are so many potential obstacles to a successful sale that planning is a must. Unless you have substantial training in this area and deal experience, its hard to see the obstacles, let alone overcome them. A transition team will more than pay for itself as its insights and recommendations help remove obstacles and add value, sometimes substantially, while you focus on running the business at peak performance and maintaining strong relationships with key stakeholders during the sale process.
If you have questions about preparing to for a business sale or forming a transition team, call Al Statz at 707-781-8580 or email Al to arrange a confidential consultation.