Systematic approach increases likelihood of sale, better price
[caption id="attachment_24185" align="alignleft" width="108" caption="Al Statz"][/caption]
Remember the story about the chicken and pig that walk past a diner advertising “bacon and eggs” for breakfast? The chicken enthusiastically endorses the menu. The pig replies, "For you it’s all in a day’s work. For me it’s total commitment.”
Most company owners already understand that selling a business on their terms requires commitment to a cohesive process. Others try and fail to sell, and learn the hard way that selling is more complex and fraught with pitfalls than they realized. A systematic business sale process improves your price, terms and probability of sale, and reduces your time, stress and financial risk. Here is a brief outline:
Phase 1. Evaluation & Planning
Commit to having the business objectively evaluated by a valuation expert. A reliable opinion requires significant due diligence, research and analysis of financials, assets, markets, relationships, contracts, systems and more. The expert acts in concert with your legal and financial advisers to provide essential answers that allow you to make the best decisions. This phase is critical to deciding the right time to sell, whether today or 1 to 5 years from now.
You’ll have answers regarding:
1. Most probable selling price.
2. Likely deal structures.
3. Target buyers.
4. Marketability and potential obstacles.
5. Strengths and weaknesses, value drivers and detractors.
6. Financial gaps, wealth preservation and maximizing after-tax yield.
7. Specific ways to build value, short and long term.
Phase 2. Marketing Preparation
When the time is right to sell, commit to presenting your business to prospective buyers convincingly, in writing, with supportable facts. Since confused minds always say “no,” a thorough deal book allows buyers to grasp your business opportunity, affirm their interest and make strong offers. A “blind” summary will be extracted for initial contact with target buyers. While your M&A adviser produces the book and develops a list of buyers with strong potential synergies, you’ll wrap up recommended business preparations that enhance value, marketability and transferability.
Phase 3. Confidential, Strategic Marketing
A direct marketing campaign is aimed at target buyers, using multiple communication methods. A net is cast deep and wide to produce buyers, based on your business type and circumstances. Deal books are released to candidates that demonstrate financial ability and sign a confidentiality agreement. Your adviser schedules site visits for a short list of finalists, where you get to know each other and ask in-depth questions.
Phase 4. Negotiations & Deal Structuring
Now comes the interesting part, and this is not a one-size-fits-all process. Every transaction is unique. Your adviser endeavors to obtain multiple offers, possibly through a controlled auction process, discusses their pros and cons with you and helps you select the lead horse. The adviser guides you through negotiations, in concert with your tax and legal advisers. Experience is critical.
Phase 5. Due Diligence & Closing