Planning & Positioning a Business to Sell

“In order to get the best price for the business, we ensure that all our clients are fully positioned and prepared to begin the demanding Selling Process."

The following can be significant barriers to a smooth process…

• Lack of readily available information when the potential buyer requests it
• Little attention paid to a realistic forecast
• Legal, minority shareholder or contractual impediments
• Lack of a apparent competent “team to assume the leadership if and when the owner leaves the company
• A poor buyer market
• A volatile history of profitability which cannot be explained or fixed

The operative words are “Getting Ready for Sale”

Documentation

Before any buyer can even consider whether or not your business is desirable, he must understand every aspect of your business. This is accomplished through the production of a business review, which in effect tells the story of your company, its history, financial, operational and market performance, and its structure. It will emphasize it strengths and highlight the real opportunities for a buyer.

Most closely held businesses operate to minimize taxes – most large companies seek to maximize earnings. A restatement of earnings is an essential part of this documentation.

Forecast

A buyer wants a business for what it can do in the future and so a realistic forecast backed by reasonable assumptions is required. This must be reasonable for the selling process can be long - 6 months or so - and if at the end of six months your forecast is way off, expect a renegotiation.

Fix or explain any volatility in your historical performance.

Remember that most buyers will analyze your financial statements with a fine tooth comb and inquire about dips or declines in revenue, gross margins etc or significant increases in costs. You cannot be caught in ignorance here and must have a valid explanation for these which ideally will include a solution so that these issues do not occur going forward.

Deal with your “Management Team”

You cannot be seen as a “One man show” in that the owner is the glue that holds the company together. If you intend to ease out of running the company after the sale, ensure that you have solid team to take over. And consider bringing them in to the process since after a LOI, a buyer may well want to interview key managers. Consider offering them a bonus based on the eventual price in order that they will stay through the process.

Assemble your “Selling Team”

In order to complete your team you should by now have your accountant and an experienced M&A Attorney on board.

Review and Resolve all Contract Issues

This will include facility leases, equipment leases, supplier contracts and any customer contracts. Pay attention to any unresolved issues such as product suit liability, employee suits, tax issues. Failure to do this may well result in significant delay during the process.

Build your list of Potential Buyers

We have developed a research process which together with our knowledge of market structures and access to scores of proprietary databases ensures a long list of potential qualified buyers.