Eventually there comes a day when every business owner thinks about succession planning. You ask yourself; are you going to pass the business on to your children or other family members? Do you want to sell it to a key employee or an employee group? Will you sell it to someone you don’t know? How do you sell it?
Where Do You Start?
Just like the business plan you created when you began your business, an exit strategy also requires a plan. Working through the planning process will set out the steps to follow, and answer many of the questions that will arise as you scrutinize your business from the point of view of the buyer.
A qualified Mergers & Acquisitions team works with you to determine the fundamental value of your business. Together you examine any issues which may impede a sale, look into crucial questions such as the impact of taxation on the proceeds, review what measures you can take to ensure confidentiality of financial data and determine how you can market your business without alerting employees, vendors and competitors.
Getting Full Value For Your Business
Getting top dollar for all the hard work you have put into your business over the years is always the main goal. This means finding the right buyer, at the right time, in the right circumstances, ready to make the right deal.
A buyer wants to see certain information in advance of any actual site visits. He needs to be prepped with the best information so he can begin to ask the right questions.
EBIT has developed a Confidential Information Memorandum (CIM) for the buyer. We prepare a Comprehensive Evaluation Opinion Report for the seller, which gives you the critical information required to make initial decisions on whether to move forward with the transaction or put a halt to it.
The Confidential Information Memorandum gets the buyer to the door without the risk of disclosing confidential business data to unqualified prospects. From there we move to the next step, showing the buyer the value he will receive for his money. That means having all the pertinent data and fiduciary evidence in one tight package that the buyer can share with his acquisition team.
Are You In Shape To Sell?
What kind of shape is your business in? Is it fighting fit? Has the accountant gotten the books right and tight? Is the physical plant ship shape? Is the work force enthusiastic, well trained and motivated?
If you aren’t in shape to sell, you may be leaving a lot of money on the table. Delaying the sale for a short period to polish up the details is a worthwhile investment. Pull together a small group of trusted advisors and identify issues that should be rectified before putting the business on the market.
First and foremost, make sure the books are in order. Tighten up the balance sheet. Recast the profit & loss statements. Take a fresh look at quality of earnings. Remove your personal vehicles from the balance sheet. Scrutinize credit facilities and outstanding debts. Review cash flow forecasts, and work to maximize projected cash utilization over the coming twelve-month period. Clean up those accounts receivables! Tighten up that inventory!
Pretend you are coming to buy the business. What do you see? Take a fresh look around your facilities. Could the outside use a lick of paint? What shape is the physical equipment in? Are the workspaces light and bright? Is your technology up to date? Is your staff happy, motivated, long-term employees who are invested in seeing the business succeed? Are they productive?
Succession planning is a big part of every business owner’s business plan. Whether you are passing down your business to your children or looking to sell your business to an employee or an outside party, there is a lot of planning that needs to be done. EBIT believes that the years of hard work and dedication you have put into your business should be rewarded with a top dollar sale.