Carol Roth published this helpful post on LinkedIn and I thought we should repost it here on her blog. Below is the LinkedIn post and I have pasted the text below so it is easier to read.
10 Steps to Prep Your Business for Sale
As a “recovering” investment banker and advisor to a private equity firm, I have advised on both sides of sales processes and see a lot of mistakes made that lead to “value leakage” from deals.
Here are 10 steps you should take to prepare your business for a sale….
1-List and Prioritize Shareholder Objectives—For many small business owners, price isn’t the only consideration
2-Put Your Advisory Team Together Early—This includes your lawyer, your accountant and your advisor. The more time they have to know you and the business and the materials, the better
3-Develop a Succession or Transition Plan—Often, a buyer wants or needs management, even if it is for a transition time, so make sure you have that plan in place
4-Incentivize Non-Owner Management—You want to take care of those who have helped grow the business and ensure they don’t hold the business “hostage” during a sale
5-Identify and Eliminate “Non-core” Expenses—You will get more credit if you do this ahead of time than try to pro-forma it back in during the process
6-Get Your Financials Audited- Buyers being able to rely on your financials is key to maximizing valuation
7-Organize Your Key Documents—Sloppy contracts can create issues for you and organizing ahead of time helps a process to run smoothly
8-Create a Future Strategic Plan—Buyers want to know there is more growth to come
9-Put Off Unnecessary Additional Investments—This can materially impact value
10-Beware of Business Cycles—Again, more growth ahead means a higher valuation multiple
If you want the full three-part article series, I am happy to forward it to you upon request…use the contact form at CarolRoth.com
Photo by Claudio Schwarz on Unsplash
