Selling your business is a major consideration, especially after many years of long hours and hard work. Your business is likely to be your most valued asset in terms of dollars and retirement. Valuations are currently extremely high, but not likely to continue for long given that a disruption in the markets is inevitable and this business cycle is already beyond the average of 7.9 years.Receiving the proper business consulting and M&A advice on the sale process, maximizing the sale price and getting the deal done are critical, and are comprised of hundreds of small steps.
Here are some important tips if you are considering selling your business in the near future:
Understand what the realistic value of your business is today and the varying ways a deal can get done. Make sure you understand the key components of a legitimate offer. Both buyer and seller need to understand exactly how the offer is structured (cash, assets, stock, deferred compensation, earn out).
Structure the Sale to Protect Your Business
Carefully qualify who you engage with in the sale of your business and only deal with acquirers you determine are serious and have the funds to close. You should only release information about your business that would be appropriate as part of the sale process. A business/M&A advisor is critical to prepare, communicate and negotiate the right information during the sale process.
Get to the Offer Stage Quickly
Whether buying or selling a business, a well drafted offer letter in the form of a non-binding Letter of Intent is critical and provides a platform from which to proceed. It’s in no one’s interest to put a huge amount of effort and resources into a business sale before both parties can agree on a clearly understood, viable offer that represents a good probability of closing.
Manage Expectations and Be Prepared For Due Diligence
Understand the other party’s position. This is key in your negotiations with the buyer and successfully getting through the due diligence process. Do not provide information prior to an offer that would typically be information provided in the due diligence phase.
In all cases, prepare for the due diligence process by preparing and organizing several months prior to selling in order to make a deal work in your favor. Most importantly, have your financials, accounting and customer contracts in impeccable order. CEO Advisor, Inc. has the experience and expertise in both preparing for the sale process and initiating the sale process on your behalf.
Determine Your Role in the Future
Negotiate your role and compensation early on in the process before you are too deeply vested in time and resources. Far too often acquiring companies will push this off until it is too late for you to strike a favorable deal for yourself. You can make a substantial amount of money after the sale, and your involvement in the business for a period of time is critical to make the sale happen.
Hit Your Targets Along the Way
It is extremely important for both sides if the business for sale has a record of achieving its monthly forecast and continues to hit its targets. Not achieving your sales and profit forecast at a key point in the sale process is a common reason for business sales floundering or falling out altogether. Your business isn’t sold until the closing occurs and you never want to create concern or cause your buyer to walk.
Keep the Sale Process on Track
The process of selling a business can absorb more time and resources than you realize, resulting in high costs, lost sales and you being distracted from your business. Be very clear early on how the sale process should unfold and make sure you are delivering on your side. Keep on timelines and don’t abandon them at any point. Instill reasonable deadlines and lock in a closing date as soon as the due diligence process is complete.CEO Advisor, Inc. provides business consulting and M&A advisory services, including mergers, sales and acquisitions to CEOs of small and mid-size companies. We address your specific needs with hands-on expertise and seasoned advice.
Contact Mark Hartsell, a trusted M&A advisor, today for a no cost initial consultation by calling (949) 629-2520 or emailing MHartsell@CEOAdvisor.com.