It’s time for spring cleaning, at home and at work. I only wish my clients did a regular Spring cleaning. It would make due diligence and the whole business sale process a lot smoother. Here’s what I mean:
- Clean financials: I harp on this a lot. Messy numbers and casual accounting practices create headaches when it comes time to sell. Audited financials, on the other hand, can actually increase a buyer’s offer. Hopefully, you have a good relationship with your CPA. If not, due diligence can be painful for all involved. Answers trickle in, responses drag out, and parties on both sides get frustrated.
- Clean facility: Neatness matters. Buyers will always comment with pleasant surprise when a facility is clean and organized, with a logical place for equipment and inventory. This goes for office teams too. If you have even one manager who hoards paperwork and lets things pile up, buyers will notice.
- Digital files: We brought on some new team members a while back and quickly realized our digital recordkeeping needed some help. Now our file systems are better labeled and more intuitive, and that’s going to make work more efficient for everyone. One company I know has even planned a digital spring cleaning as a team. They’ll spend an hour or so going over their file systems, agreeing on things that should be deleted, moved, or renamed.
- Excess equipment: There’s something about machine shop owners—they love going to auctions and getting good deals. But a lot of that equipment goes unused. Then we have a problem when it’s time to sell, and I have to tell them that their $10 million in asset value is only worth $8 million on an operating basis. Take that unused equipment to auction. That revenue, together with what we can get for the business, will get you closer to your financial goals. There no reason to have excess equipment on the books in a sale.
So take some time to clean and organize this Spring. Get your entire team involved. You’ll all be more productive and you’ll be better prepared when it comes time to sell. Buyers will take note and reward these efforts.
Al Statz is President and founder of Exit Strategies Group, a leading California-based M&A advisory firm with decades of experience selling manufacturing, distribution and service companies in the lower middle market. For further information, or to discuss a potential sale or acquisition, confidentially, contact Al Statz at 707-781-8580.