Before selling your company, ask yourself if you needed a tooth to be pulled out, would you see a dentist or do it yourself?
In the same way when selling a business ensure you do it advised, it’s a specialised process and a well-trodden path for an M&A advisor.
Your Precision M&A Account director will help outline the steps in the process, stick to those and the deal is safe. I also assume your business has its financials going in the right direction and other tangible metrics also are sound.
Cultural Viability You may see this already in the ‘story’ you communicate to customers when making a sale and why they should choose you all else equal. It could be innovation, speed to market or customer service. It’s the same when positioning the business as a strategic asset for a potential purchaser – it’s an added intangible value over what is earned through hard graft in the market. The second factor relates to ‘cultural readiness’, if you stepped away for an extended period, say one or two months, maybe even six months, how would the business fare? Have you already tried this and what were the results? You need a second tier of management who can run the company and a team of staff who are not just committed to you. Buyers are now very careful not just about management team, but a team of people who will continue to perform once you have moved on.
Operational Viability Management and staff teams need to be empowered to make decisions about strategy and operations. This has the added benefit of more accountability and better business systems rather than having most or all information owned by you the business owner. Without this you may never have a clean exit and have too much deferred consideration in your company purchase price. A potential buyer needs to be able to conduct due diligence, having robust, auditable business processes and systems will evidence the business will operate as expected once you have stepped away. The second factor is even if financials look good, how robust are they and where are the risks? Is too much revenue/profit attributed to only a few customers? What is the relationship like with key suppliers and how dependent is the business? If losing a key customer or supplier alters the numbers significantly it will be worth investing in efforts to address the imbalance. Culture and operations overlap from internal business mechanisms to external market perceptions and strategic value is commanded through evidencing in due diligence.
It’s important that you the owner can take a step back and can ultimately become replaceable. Often a difficult message and more so to implement, but if you achieve it, you’ll achieve a deal at a strategic premium.
