Getting the best deal when you sell your business is a big task. Unfortunately, it's a process all too many business owners take too lightly. They end up preventing them from losing their jobs with strategic commercial thinking on all aspects of the sales process and the transaction. To help you get your best deal; I have developed a ten step process that you can follow to help you achieve your goals.
One thing I've found is getting your best deal often depends on employing and using the right group of consultants. These consultants are your lawyer, accountant, budget and consultant and / or investment bank. These experts combine the team you need to get the most dollars and the best terms. Each has its own expertise and you need them all. Few dollars you spend for professional assistance (usually 10% or less, of what you get off sale) will do much more than pay for better exit. but require discipline, work and sometimes painful honest self-esteem.
# 1 Develop two written lists of goals – the goals of life and your goals. In short, what do you want to do in your life after you sell the company? Develop each set of goals individually. This helps you keep your perspective. Compare both lists. Do not be surprised to see conflicts. Solve all conflicts between two target groups and prepare a consistent list, keep business and personal goals separate than on one page. Share the list with your leadership group. In most cases, they will remain (and locking them in their jobs can be the key to achieving your goals). Then pray for their views – in writing – both the goals and the potential impact of achieving the goals in their areas of responsibility.
# 2 Use the list of your goals to create the guideline. Items in this checklist are: Minimum selling rate (see # 3 below) needed to block all the spend in your budget and ensure success in your retirement or in the next endeavor; brand buyer suitable for running the company; schedule for sale; The objective of achieving any sales (including employment contracts, shadow ratios or equity for key figures); transfer time and contract for you; Wishes terms and conditions; and other financial issues. Change your checklist into MUST items, what the buyer and / or merchandise trade must have for you to conclude a deal, and like items that are happy with the sale while it's fun to get. A good, solid checklist takes time to develop, but it will keep you on target.
# 3 Pricing is important. While you must get your minimum price, you will almost certainly want more. In addition, you probably want to set prices that allow you to get a negotiation. You should have your consultant or one of the other team members to prepare (or commission) an independent assessment of the company. The valuation will give you a good starting point for realistic pricing. Ideally, the assessment should allow you to compare some assessment methods to the value of your business. These calculations can be based on: multiple revenue methods; asset value plus goodwill; or some of the many advanced cash flow models. Knowing how much is asking and under what terms are the main points in your success.
# 4 Take a look at all the preparations done before the day before looking for a buyer or dangling a tantalizing "carrot" in front of the interests. Be arrogant honest with yourself. Have you taken into account all the responses? Have you reviewed and viewed all your budgets? Would strengthen the company in a short period of time lead to higher selling prices or better terms? ARE YOU GIVEN TO GET AWAY AND GET?
# 5 Evaluate specific potential buyers against your checklist. Prospective buyers for small and medium-sized businesses can find local and regional publications, as well as The Wall Street Journal, for goodwill or business opportunities. Investment managers, venture capitalists, local banks, accountants and lawyers, as well as many business partners, are all potential sources of business. Your managers may be willing and willing to offer you an offer. A family member may wish to continue trading. Customers and / or vendors and / or competitors may be interested. Researchers and individuals who trade in interests match your criteria, but do not make any announcements until you're really ready to go public and tell the world. (When you announce that the company is for sale, there will usually be more "tire kickers" than you would like to deal with.) In addition, some competitors will almost certainly use such information as a way to try to "raid" your key accounts. Match all prospects against your MUST. If you find that a "will" is missing, go to the next prospective buyer.
# 6 Develop a short list of prospects that consist of those who inquire, those you think might make a good match and those you think could do a good business. Give them a rating about their attractiveness of their ability to complete the business, grow the company and complete all payments to you. When you have a work list to comply with your criteria, you, or preferably a member of your team, can start creating contacts. An important show of interest leads to the prospect of signing a confidentiality agreement. It is at this point that you will usually start publishing financial and other information to the prospective buyer.
# 7 Once the Confidentiality Agreement has been established and when you have prepared to disclose information, the team is required to conduct due diligence in order to choose which prospective buyers – companies or individuals identified above before releasing information devices. Serious buyers should require reviewing records, tax returns, financial statements, public information and other documents. They should talk with your accountants, lawyers and consultants. They should want to speak (and it needs to be treated very sensitively), with your vendors, customers and employees. They should also be ready to prove that they can complete the transaction. Due diligence is necessary for both sides in creating a winning contract.
# 8 Start a challenging task to negotiate sales. My advice to customers (buyers and sellers, like) is to try to manage terms rather than the price. A few years ago, I made an agreement on a deal where the seller and the buyers were far apart in their plan of what the company was worth. We built the sale agreement so that the net worth, the money supply today, is equivalent to what the buyer wanted to pay, but the total value of the transaction over time was more than the seller initially asked. Both sides felt as if they conquered. Other advice I give to my clients is to be careful in negotiations. Realize, especially in the first discussion that leads to the transaction you might be regarded as an entrepreneur who is interested in having the company "approved" but sold; Egypt as a large, uncompromising, common type of company, only selling a product line or department for a particular day or at a certain price; Egypt as representatives of shareholders who do not know the company or its potential or future and just want out. Passing this understanding is the key to increasing contract value. Everyone needs different methods and high sensitivity.
# 9 Identify and coordinate your options for pay close and post-sale. Knowing what you want is important to get it. A brief description of options includes: strict cash sales due to closure; tax-free stock exchange; cash and cash equivalents plus employment contract; cash, commitment and competitive statement; venture. The list continues. Be sure to exclude that you have removed some uncertain debts arising from transactions in the old business. Such transactions may include: unpaid taxes; indefinite rents; Unified Commercial Code filings (UCC) which has not been met. If these items are not cleared, it may result in a costly return later. Allow an average of 2-6 months to enable serious buyers to analyze and sort out resources.
# 10 Closing can be tricky and unfortunately there has been unraveling of many bids. Again, be careful. A contract is not concluded until all parties have registered for the transaction. One agreement I witnessed fell to the final table when one of the counselors demanding that he be "emotionally moved" by the integrity shown by both read read poems that he had written for the occasion. After closing, your new life begins. You are either out the door or employee who will (probably) be out the door when new ownership is able to cope with the operation of the company. (Although employment contracts are concluded, most former owners are asked to go well before their maturity.) More importantly, the "money" now stops elsewhere. Remember it and stand aside. Whatever you choose, happiness and good luck when you look at your options.
If you are looking to sell your business, you can get the right professional help to translate the difference between successful sales and frustration of time, work and hope for waste. Strengthen your position in sales by completing your research and consulting with your consultants in advance. With proper planning, you can do the best when selling your business.
Copyright 2006 John J Reddish