Selling a business is a lot like selling any other product. There is a series of standard steps that lead to successful closure, followed by post sale service and support. The better your product is designed, the easier it is to sell, the higher the price that you can achieve, and the less post sale support you have to render. The most important issues on which you can focus are Preparation, Positioning, and Packaging. The tips below are oriented toward these objectives.
Keep Track Of Your Discretionary Income - Most privately held companies attempt to manage income and expenses in such a way as to minimize tax liability. Often, this causes the company's income statement to indicate, poor financial performance. Therefore, keep track of your discretionary expenses, owner's perks & benefits, one--time investments and extraordinary expenses that are legitimate tax deductions.
Make Yourself Dispensable - Even though there can be great ego satisfaction for a business owner in being indispensable to your customers and your employees, it doesn't build equity. The best businesses, and the ones worth the most money, operate without the day to day intervention of the owner, Therefore, build a team of trusted employees that runs the company. This addresses two of a buyer's biggest concerns, transferability and continuity.
Identify Under-Performing Assets - There are often intangible assets that are either unrecognized, forgotten or simply not being exploited. These might include new product ideas, key alliances, contractual relationships, patents, customer lists or interesting business opportunities related to the core business. Many times these intangible assets are languishing simply because no one is focusing on them. Should they be spun off and sold separately? Should they be developed and sold with the core business? Should they be called out in the sales memorandum and offered as value enhancers? Maybe they should be retained by you or between you and the new owner in a joint venture?
Set Up Good System - The success of the business can't be dependent on your personal knowledge skills and contacts if you want to maximize value, it can't be dependent on the specific people you have in your company. Employees leave, get sick, die, have, babies, etc... It is incredibly powerful to be able to tell a buyer, "This is how we do things around here. Several people know how to do this in the company, and if they forget, it's all written down right here. When we need to bring a new employee up to speed in short order. Here's how it works..."
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Money Talk |
Investing in USA |