While this is the time many are making (or maybe already breaking) New Year’s Resolutions, now is not only a great time to focus on your own health, but also the health of your business. 2023 might be the year you are looking to sell or maybe just get more organized. We have some great planning strategies that can help you increase the value of your business, help it run more efficiently, and provide a smooth transition for all when you are ready to sell.
1. Get an early start. Preparing for a sale takes time. Owners should focus on business valuation drivers such as sales growth, product offering, management team and profitability.
2. Assemble your team. Gather a group of talented professionals to help with the sale. The team should help prepare due diligence materials, develop a buyer profile, structure the deal to minimize tax consequences and, most importantly, meet the business owner’s goals.
3. Establish long-term contracts. Buyers find dependable cash flow attractive in a company. If possible, business owners should develop contracts that have terms of one year or longer and do not require the consent of the customer to transfer the contract to the new owner.
4. Develop a strong brand. A strong brand and community awareness are distinct assets for a business and are part of the business’s value.
5. Build a strong team. A company has little value if the business is centered around the exiting owner. An owner should build a staff of key employees who have client relationships, technical expertise, knowledge of business operations and an ability to work independently from the owner.
6. Organize financials. Buyers want to see a company’s financial data in an organized, electronic format. For a small, privately held company, a buyer may not require audited financials, but a buyer will expect to see three to five years of well-organized financial data that has been reviewed by the company’s CPA or accountant.
7. Clean up outstanding issues. Clean up any lawsuits, threatened lawsuits, insurance claims, warranty claims, supplier issues and HR issues before putting the company up for sale. Not cleaning up these issues may suggest to a buyer that the company is not well-managed.
8. Develop a sales strategy. A mergers-and-acquisitions specialist or advisor can help a business owner market the business. This person will work with the business owner to develop a buyer profile and business description report to attract buyers. The advisor will also justify the asking price and attract sophisticated buyers. This advisor takes on most of the work related to the sale, so the business owner can focus on growing the company.
If you are thinking about selling your company anytime in the near future, it is never too early to start implementing the above-strategies. And as with taking care of your own health, many times it is easier to enlist the help of professionals. At Seck Advisor Group, we are here to help when the time is right for you.