Planning and preparation before selling a business can be a challenge for many company owners. Along with the mixed emotions of letting go of a business they have built, owners also want to be sure the sale will be the best for the company and its employees.
Inc. shares the following strategies to help protect your business when you are planning to sell.
- Know the real workload. Many company owners underestimate the time and energy needed to sell a business. As a result, daily business operations can suffer when leadership is involved with time-consuming meetings related to the sale, which can affect the final valuation and put the seller in a more precarious position.
- Build operational resilience. Work to ensure your business can run without your constant attention. Establish clear accountability structures and documented processes for your team. You want to be able to show your business can thrive when you are minimally involved to help increase buyer confidence.
- Conduct mock due diligence. Rather than scrambling to find documents for potential buyers, be proactive and gather all necessary paperwork—such as contracts, financial statements, customer agreements and operational data—to have available in a well-organized place. You also could ask your accountants to perform a “quality of earnings” review to identify potential issues before negotiation begins.
- Assemble an experienced transaction team. A knowledgeable team is crucial to a successful sale. Author Bruce Eckfeldt, a strategic business coach and Inc. 5000 CEO, recommends using “an investment banker familiar with your industry’s valuation models; a mergers and acquisitions attorney who closes deals regularly; a transaction-experienced accountant; and a personal wealth advisor who understands the tax implications of various deal structures.”
