- On January 5, 2016
Make Your Business Desirable and Marketable
Abraham Lincoln said, “Give me six hours to chop down a tree and I will spend the first four sharpening the axe”. Selling a business is one of the most important financial occurrences in a business owner’s lifetime. Selling a business should be a well planned and controlled process of making a business desirable and marketable. The actual sale transaction is just a part of the whole selling process. The secret to netting the maximum value from the sale of a business is for business owners to carefully manage and nurture the business while taking the proper steps and time to prepare for sale. Mindful consideration of the following may be helpful to attain greater success by way of preparation:
- Form a Team of Professionals: Business owners are experienced in operating businesses not in preparing businesses for sale. Many sellers are reluctant to seek assistance from their attorneys, bankers and accountants to prepare for the sale of their business. Unfortunately, many business owners unwisely and myopically focus on fees and the short-term as opposed to the long-term and net value, thereby losing bottom-line benefit from the sale, increasing liability exposure and risk of overall sale and post-deal failures. Business owners using a team of dedicated and well coordinated professionals attain the best sale and post-sale long term results.
- Plan for Sale Well in Advance: As home owners take the time to spruce up their houses before listing their residence for sale, business sellers benefit from making their business more attractive to buyers. Savvy sellers and teammates take the time well in advance of a sale to identify potential internal and external buyers, determine what a buyer desires and make the appropriate changes to fulfill those desires. Making the desired changes requires spending time and proactive planning, easily a year or more in advance, if possible. The reason for the sale (i.e. retirement, illness or death, dispute with partner) may impact the advance planning and the structure of the transaction. Some common planning considerations include:
- Understand the market place and your competition.
- Address accounting practices, controls and tax records to provide credibility to purchasers by way of audit, review or compilation attestation services.
- Review all business, legal and tax structuring, compliance, operations and intellectual property protection.
- Properly structure business ownership (i.e., stock and LLC units of ownership) for tax savings and asset protection purposes.
- Address employment agreements, buy-sell agreements, non-competes and restrictive covenants with co-owners and key employees.
- Review personal level estate tax and income tax planning, as well as asset protection planning, involving receipts and use of the sales proceeds.
- Address business valuation and personal goodwill considerations on a yearly basis.
For more information on how we can assist you, please contact us at 847-382-9130.