Will you and your business be ready when the time or opportunity to sell comes along?

The ‘What If’ Analogy…
What if you decided to sell your home this year – or, what if someone came along tomorrow interested in buying your home right now? Would you be prepared? Are you ready for a potential buyer to start poking around more closely – foundations, structure, roof, plumbing, electric, heater, appliances, etc.? Would knowing everything about these details increase the value of your home — or might it be the other way around? What if you were ‘prepared’ and had everything in great shape, no deferred maintenance and your home was nicely ‘staged’ so that a potential buyer could clearly see how they might quickly acquire and move into your house and live comfortably. How might that impact the selling price and time it might take to complete the sale? (1)
What if we are talking about your business?

Based on what I have seen with clients, experienced first hand and have heard consistently from business broker colleagues, owners are often not ready when they decide to sell their business or they have an opportunity to sell knocking at their door (The Wall Street Journal recently had an article on this subject titled “Want to sell a Business? You May Not Be Ready” (2).
In addition to profitability and cash flow, there are a number of things that can increase the value of your business and the speed of sale (and transition) i.e.:

  • A business with the right team and structure in place to continue being successful with or without you
  • Systems, processes and procedures that are well defined, understandable, up-to-date and working properly
  • Management reporting that is delivered consistently, concisely and reliably and provides decisionable information from which you and your team can effectively operate the business
  • Customers, Employees and critical Vendors who are happy, referenceable and loyal (to the business – not just to you)
  • Properly prepared (and audited or auditable) financial statements available annually
  • Strong accounting processes and controls that are consistently followed

These are obviously important and desirable whether you plan to sell you business or not. If, like many owners, you do plan to sell your business, being well prepared could represent significant additional value and allow for a smoother, faster transaction and transition. Getting a business in the best shape for sale is often a 3-5 year process. And, like properly staging your home, you will benefit from the expertise of outside professionals who understand the components of value and how they fit together (beyond just the financial statements). Yes I realize that is a self-serving statement, but it is the truth.

(1) Some of my inspiration for this post comes from my friend Susan Peters who is a master at staging and marketing her client’s homes – adding significant value in terms of both higher sale price and speed of sale (www.susanpeters.com).
(2) “Want to sell a Business? You May Not Be Ready” By Arden Dale, Wall Street Journal, January 8, 2008, page B6. Note that this link will only work if you have a subscription to the WSJ online.

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