Selling your business is a complicated and emotional process. Getting your business ready for sale in a timely manner is essential to understanding the value drivers and being well prepared for different selling scenarios.
This allows you to enter the market at the right time with a strong equity story that convinces buyers of your company's value and potential. This ensures optimal selling conditions, making your business more attractive to financial and strategic buyers, leading to value maximization and a smoother sales process. But where do you start to prepare, and when is the right time?
Where should you start?
The first step in making your company sales-ready is to conduct a "sales readiness analysis. This analysis identifies the main opportunities and risks for value optimization and sales readiness. It distinguishes several focus areas with each focus area having several research points that determine the sales readiness of your company:
1. Strategy and market
- It is essential to have a good view of the strategy and the market in which the company operates. For this you can, among other things, check whether there is sufficient insight into the strengths, weaknesses, opportunities and threats of your company; In which markets the company operates or wants to operate; how the relationships are with customers and suppliers and whether there are major dependencies.
2. Operations and synergies.
- Important points regarding the operation and synergies are quality and depending on management and shareholder(s). A potential buyer usually looks at these critically. In addition, the effectiveness and efficiency of the business processes and the back office are important aspects.
3. Financial
- Financial aspects play a central role in the sales process. Careful preparation is therefore important. Here you can test the representativeness and comparability of the figures. In addition, the quality of forecasts and budgets, as well as an up-to-date investment policy, are important elements to include in the preparation.
4. Tax
- In addition to the financial side of the business, there are tax, and legal (item 5), matters of interest. For tax matters, you may want to consider how current is the available information; whether the business and real estate are structured appropriately for a potential sale; and whether there are potential costs as a result of a transaction.
5. Legal / HR
- Some critical points regarding the legal issues in your company include: the availability of key legal documents; Are there any pending litigation? What material contracts are in place? Are patent or trademark rights established and how are they protected?
6. Deal
- Finally, we can look at the transaction itself: What is the transaction object? What is the role of seller and management after transaction?
The sales readiness analysis is followed by an execution plan with clear objectives, actions and responsibilities. This plan leads to an optimization process with periodic check-ins to evaluate progress and sales readiness. When the execution plan is in place, the company is sales-ready, and the market is favorable, it is time to start the sales process.
When should you start?
The ideal time to start preparing your business for sale usually varies between 1 and 3 years before the start of the sales process. It is therefore advisable to pre-sort on this early, so that getting the business ready for sale does not get in the way of your personal wishes or goals and the right moment of sale can be better timed.
