Sara Burden joined us last week and her tape is jam packed with great advice, so download and listen to Sara’s tape for a complete step-by-step guide to putting all the pieces in place for a successful sale that maximizes those multiples
But before we got into the details, Sara shared her insights on these volatile economic times and she has good news. She’s seeing more M&A activity since January of this year. Business owners are feeling like they’ve survived, she said—“The thaw has begun.”
Sara continued by discussing the not so intuitive idea that you should plan and work toward selling your business from the day you open your doors. You can do this by instituting best accounting, inventory management and quality controls practices in the early stages since what buyers look for are good, in-place systems. So—prepare your exit the day you open the door—and then stay on top of everything.
And if you didn’t do that planning in the first days, then what? Sara said that she likes to start talking to clients 1-3 years out from when they actually want to sell. That time frame gives her the best opportunity to assess the business and suggest and implement changes.
As part of the check list, Sara suggests that you eliminate items that don’t add value, such as obsolete inventory and underperforming employees. At the same time, she encourages clients to take actions that create value. For instance, update your website, something not many people would have thought of as recently as five years ago. These days, your website is another face of your company. It’s your digital footprint to go along with your physical one. Both must present the best image possible to buyers. First impressions happen virtually as well these days.
She also stressed assembling the right professional team—attorney, accountant, business broker, etc. You want pros who understand your goals and objectives, and are willing to get on the same page with you. She said that you may have to sit them all down and say, “I want you to protect me, but I want you to get the deal done.”
And she noted that it could be that in buying or selling a company, you may need a different team than the advisors you’ve been working with. For instance, a transactional attorney, instead of a litigator. She also recommends that a seller hire a consultant who can help prepare the business for sale, prepare documents and do the negotiations. When the company is the seller’s baby, sometimes it’s a situation that’s just too emotional for the seller.
In addition to getting your advisors on the same page—you will need to be sure your family is too or the deal could fall apart at the last minute. There are many more tips on Sara’s Podcast, so download it now.
Thank you Sara for being a part of our Family Business Radio community.