To sell your business was never your primary objective when you created it enthusiastically.
Yet there are some “inevitables” in life:
• And Exiting Your Business
All business owners will have to exit their business at some stage of their life.
Not all of us are like Rupert Murdoch and are getting close to 90 with no sign of giving it away! At some point, most of us have a thought in the back of our head that we do want to exit our businesses. And we hope to monetise the value we have built up over the years of all that hard work.
To Sell Your Business Is Serious Business!
However, I hear many times business owners say that they will sell when someone comes to them with a big bag of money. Usually that means that these owners do not seriously want to sell. Or more likely, they have no idea about the process to actually sell their business; and they are too afraid to really think about it.
Buyers do not walk in off the street and randomly buy your business.
Sellers have to want to sell their business.
And yes, selling your business is a difficult task – it is nothing like selling a house. Indeed it is far more complex and requires serious planning which usually requires some difficult decisions.
Understand What Matters To The Buyer
To get the best value for your business, you need to understand what a potential buyer would find valuable about your business. Of course this will vary from business to business and buyer to buyer. However buyers initially look at 5 factors before they even head down the path of seriously engaging with a seller:
- Management Strength – Does the owner decide everything or is there a strong management team in place.
- Planning and Budgeting – Does the business plan for the future and do they measure their progress against this plan and budget
- Income Going Forward – What is the risk that customers will stop buying once the ownership changes. Are there contracts in place etc? Is there recurring income rather than one off sales?
- Skeletons in the Closet – How clean are the accounts and has the owner operated the business in a proper businesslike manner that gives the buyer comfort that all has been above board
- Owner – Is the price being asked realistic and does the owner actually want to sell
I am sure some of you are surprised at this list. It is missing some facts and figures. Where is: the industry analysis? a set of economic metrics around the industry and business? the competitor analysis? Etc Etc
Smart buyers are concerned with the “softer” issues as well as the hard data about the industry.
Does Your Business Pass The Buyer’s Test?
Here is a serious tip if you are contemplating the best way to sell your business and to get maximum value: Ensure that you at least consider and address these factors before you enter in any engagement with a potential buyer.
Do you have that thought in the back of your head about selling your business? Then get that thought to the front of your mind now; and spend some time on getting the basics right.
The members Of The Network Of Consulting Professionals can assist you address these issues and maximise the value of your business. Contact us to know more.