Guiding the buying and selling of businesses is an important part of my work. For this I speak to many (former) entrepreneurs and entrepreneurs-to-be. They often think that the operating result is the most important factor in a purchase or sale process.
Of course profitability is an important starting point, but a buyer also attaches great importance to the future viability of the company and the underlying risks. It takes time to identify and respond to these. Therefore, start early with preparing your business for sale.
It happens that entrepreneurs decide ad hoc to sell their business. For example, they see a successful sale of a competitor or there are circumstances or developments that make them tired of doing business. It may also be that a suitable buyer suddenly presents itself.
With businesses that come onto the market in this way, things often come to light that can lead to a less favorable negotiation result, or lead to a longer and more laborious bookkeeping investigation. Unnecessary, because even if you're not thinking about selling right away, you can get your business ready to sell.
Critically review
I often make the comparison to selling a house. Once you decide to do so, you hold your home up to a critical eye again. That one little wall could use some paint, it's time to finish the baseboards and you go after the maintenance contract for the central heating boiler.
Actually, I ask business owners to do the same when getting their businesses ready to sell. And again, whether you want to sell a business tomorrow, next month or next year, you are already reaping the benefits of those efforts.
Minimize risks
Keep in mind that buyers are looking for collateral. In other words, they are trying to identify the risks that will prevent the successful continuation of the business. In fact, substantial risks are often factored into the sale price and reflected in the transaction terms.
So every reason to minimize these risks wherever possible. So are you an entrepreneur indispensable in your business? Then it's time to build a solid team, with responsibilities spread out. Is your business dependent on one major customer or supplier? Then try to diversify in this. After all, if that one customer or supplier falls away, it will likely impact the results the new owner can achieve.
You'll notice that a buyer is aware of this soon enough during negotiations.
The more comfortable, the better
Is this everything? Definitely not! Just think about what you yourself would want to know if you were buying a business. What about the records? Do you have accurate and detailed financial documentation that is up-to-date? The easier it is for you to present these, the more comfort it offers a buyer. Instead of estimates and assumptions, you offer data that is verifiable to a buyer. Other concerns?
Make sure all legal documentation is in order, such as contracts, permits, leases and intellectual property rights. And think about setting up an organized CRM system, a professional website, active social media accounts and (positive) references. Furthermore, I often point entrepreneurs to the proper maintenance of assets. This is because overdue investments are factored into a buyer's valuation and bid.
Get started
These are some examples that fall under getting a business ready to sell; things you can get started with right away. After all, it is good for every business owner to have these things in order. Of course there are more and case-specific matters that also deserve attention. I am happy to be of service in this respect and know from experience that the decision to sell can suddenly drop. In short, when that buyer comes, make sure you are ready.
