Whether you
are considering selling your business now or sometime in the future, the
most important thing you can do to ensure a successful and profitable
sale is to take the necessary steps to properly position your business
for sale. There are hundreds of reasons why a company is difficult or
even impossible to sell, but most are attributed to a lack of planning.
In many
ways, selling a business is like selling a house. The better a house
looks, the faster it sells and at a more favorable price. The goal of
pre-sale positioning is to either eliminate or mitigate any negative
aspects that may hinder the sale, as well as to highlight the best
aspects of the business. In addition, this is the time to recast income
statements and balance sheets.
While each
situation is unique, often there are many solutions to any one
situation. The major issues owners must deal with when positioning a
business for sale include:
-
Decision making
– The decision to actually sell is not a decision to be made
lightly. It effects your future and that of your family and is often
very emotional.
-
Management issues
– Employment contracts and non-compete agreements need to be
explored. It is important for a new owner to know key managers will
stay and that none will leave and compete with the company.
-
Facilities –
Appearance, lease and rent arrangements are important factors. An
attractively maintained facility tells a buyer a great deal about
the company.
-
Financial
statements – Financial statements should be audited or compiled
by a competent accountant or CPA. Making sure all assets and
liabilities are properly reflected on the balance sheet and
nonrecurring expenses for a new owner are easily identified are
issues to address.
-
Legal
considerations – It is important to make sure your corporate
records are up-to-date and any legal issues resolved.
-
Tax planning
strategies – Regardless of whether the company is a "C"
corporation or "S" corporation, estate planning is an area of
extreme importance and ultimately effects the net cash received.
-
Price expectations
– This is the time to obtain a realistic valuation and understand
the price being paid for your type of company in the current market
and the factors that either increase or decrease the price.
Read our published
article,
"Preparing You Company For
Sale"
