Business owners hoping for a successful sale of their business often dive into the sale process without much thought. Neglecting pre-sale planning can diminish their chances of a successful sale, and even taint the marketplace for future efforts. Potential buyers expect to purchase valuable businesses that are properly prepared, and they wouldn’t want to invest in false promises or flashy sales pitches.
Pre-sale planning is an integral part of a successful exit or business transition. The following strategies can help you plan for a successful sale. This, in turn, can drive buyer interest and ultimately yield a higher sale price. An experienced M&A advisor should be able to help with pre-sale planning as they have a vested interest in maximizing value and improving closing rates.
Build a Process
Just as you created a business plan before starting your business, you need to establish a process for selling your company. A pre-sale planning process should identify your exit objectives, including when you want to leave and your minimum price, terms and structure for a successful exit. Your plan must also identify your values—the goals that extend beyond financial concerns. What do you want to do with your retirement? How much transition support would you provide? Are you willing to sign a Non-Compete Agreement? What is most important to you as you leave? What do you want your company to look like after your exit?
An experienced M&A advisor can work with you to clarify your goals for a sale and help you determine what you want your life to look like when the sale is completed.
Create an Advisory Team
A successful exit typically requires outside expertise. Don’t try to go it alone. M&A advisors typically help owners prepare for the due diligence process and can assist with addressing potentially problematic situations While this function is critical, it can also neglect other important aspects of exit planning, including identifying and addressing the owner’s values.
Consider assembling a team of experts who can help you with every aspect of planning. Who could help to properly appraise the business value? Who could help mitigate tax implications from the sale? Who would be the chief negotiator? Where can you find an effective M&A Attorney who is abreast of the germane issues? Better yet, why not hire an M&A firm who already has such a team in place. This can help streamline the process, and ensure that you won’t end up spending all of your free time managing the many challenges of selling your business. For many owners, managing a sale becomes a full-time job unto itself. With the assistance of an advisory team, not only would you maximize value, but you would also free up time so you can get back to managing your business and driving value that can ultimately improve the terms of the sale.
Work With Outside Experts
M&A intermediaries are more than just advisors. They have specialized training to help guide you through each step of the exit, including exit planning, pre-market tax analysis, valuation assistance, preparation, marketing and deal structuring and negotiation. They have access to the tools, resources, and skills necessary to devise and implement a comprehensive pre-sale planning process. This can help owners avoid pitfalls and unpleasant surprises. It also supports an efficient process that saves time and money while increasing value.
Most business owners have done a great job at growing and developing their companies, however, they may not be very well positioned to address all the relevant issues associated with divesting from their business. By the time an owner realizes this, the process may already be well underway. M&A advisors are trained to manage the common obstacles owners face. They build a reliable process, lean on a trustworthy team, and assure owners that their expert insight and experience can see the sale through to successful completion.
About Trinity Transaction Advisory
Since 2002, Trinity Transaction Advisory, a lower middle market M&A (Mergers and Acquisitions) transaction advisory firm, has been assisting owners and shareholders of privately held companies, with annual revenues over $5,000,000, in planning and executing customized exit solutions.
Business owners expect candid discussions with real answers and deserve professional representation each step of the way. We surround each of our clients with a team of M&A transaction professionals, providing support to navigate through the maze of complex issues confronting each transaction. Contact Trinity today for a confidential evaluation.