Preparation pays off when selling a business

When asked to do something for the first time, do you quickly just say yes? Probably not. You most likely want to know more details about what you are facing before you commit, and then decide how best to prepare for the task.

However, for some reason it seems that many business owners are willing to put their companies up for sale without this typical preparation.

Being prepared to sell a business is far more complex than selling a house. Simply putting on a fresh coat of paint or making some other eye-appealing improvements may work for a house sale but might not be the answer for selling a business. The sale of a business is much more complex and the buyers are much more sophisticated. They will note the freshness of the paint and wonder what you are trying to cover up. Having a company prepared to garner a top selling price is done by investing some time into your company today.

Your timeframe for selling determines which options are available. One option that we would recommend, no matter what your timeframe, is a presale due diligence. A buyer is going to invest money and hire a qualified team to come in and review every part of your business. If something is not right, they are going to find it and ask for a price reduction. Most things that are found could have been or should have been fixed by you before the sale.

The best way to avoid the fear that something wrong will be discovered is to hire a good set of advisors in advance of a sale and let them or another qualified firm conduct a similar level of due diligence. If you find the problems and fix them now, the payback will be great.

There are many signs pointing to the next couple of years being positive for the M&A market. Buyers have cash, banks want to lend and there is the need in many industries for consolidation to fuel growth. Sellers are back in demand, and it is the prepared seller that is going to reap the rewards.

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