Whatever the reason for selling your business, looking attractive to prospective buyers, and getting the best price possible, remains the surest way to ensure a comfortable future for everyone.
Here are some of the essentials you'll need for a successful exit:
- Know why you’re selling
Think about your personal and professional objectives, whether they’ve been met and whether they match the needs of the business going forward. Consider what kinds of leadership skills may be needed in the future and whether you are qualified, or even want to preside over the future direction of the business.
- Know your sector
It’s not enough to understand just your own business and your immediate competitors. There’s a world of potential buyers out there. Have a list of them and keep up to speed with what’s happening by reading trade publications, newspapers and doing your own research on related companies – especially once they are successfully sold. Learn what buyers are most interested in acquiring and look for ways to position your business in these service segments.
- Earn more money
Any M&A adviser will tell you that profitable businesses fetch far better prices than those that aren’t. The phrase “turnover is vanity, profit is sanity, cash is reality” holds as true today as it did when it was first coined. Sellers need to build their business so they can present at least three years of profits of more than 25% per annum before looking to sell. At the same time, they need to conserve money to be able to present healthy cash flow.
- Organise your paperwork
Acquisitions are complex processes, so it’s important to make certain that the critical information that buyers need is clear and accessible. Review and understand the due diligence process and make certain that all financial and legal information is available and ready to be presented promptly. This extends to ensuring all operating licences and certificates are up to date, including third-party leases and contracts.
- Keep your business running optimally
Buyers are always looking for ways to pay as little as possible, so make sure you give them no excuses. This is particularly true during negotiations. Don’t allow your day-to-day operations to flag, and don’t put off investments that support continuous improvement. Maintain your pursuit of excellence and see to it that your business is running optimally throughout the process.
- Involve your staff
It’s important to keep your employees and business partners informed about your intentions from start to finish. The sale of a business can affect morale and the business’ performance in the lead-up to a sale. Make sure you discuss the future openly with all of your staff to avoid losing key personnel. Buyers will be well within their rights to walk away from a deal where the most important creators of value in the business are preparing to walk away.
- Raise your profile
Triggering a bidding war is an excellent way to ensure you get the best price for your business. A well-planned marketing campaign can draw out additional bidders, but only if they are aware of the value your business brings. A targeted campaign can help inform bidders so they can better appreciate the parts of your business that are complementary to their own service or product, especially if it helps them grow an existing market or capitalise on a new opportunity.
- Get your timing right
It makes sense to sell when the market for your business is highest. But stock markets go down as well as up, and buyers always prefer to make purchases when the market favours lower selling prices. Your best defence against this is to have a clear idea of both the present and potential future value of your business, and then stick to your guns. Unless you are a distressed seller, you can change your mind at any time.
- Be professional
Using the right technology partner says a lot about you and sends a signal that you are serious about making the sale a success. When it comes to sharing information about your business to potential buyers, generic collaboration tools like Google Drive, or Dropbox, do not have the security safeguards, support, or M&A specific features necessary to run your deal smoothly.
Using a data room will streamline the process to give you and your buyers the the best possible experience, and increase the chances that you get a fair price for your business.
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