There is a healthy amount of optimism surrounding the state of the economy these days, and many businesses may be considering making a sale while things are still going well. It is always a tough decision to make and one that requires careful planning. There are various steps that company leaders can take to assess whether it is the right time to sell. Of course, selling high is always of paramount importance, so here are some tips to help position your business to get top value:
1. Get Everything Organized
Getting organized and staying that way will prove absolutely critical in closing a sale. Business transactions can certainly take months to complete, but that time should be focused on ironing out the terms of the deal and not scrambling to locate important information. Prospective buyers are going to want to review a ton of documentation and company data, so having everything on hand, in an organized manner, and easy to share without compromising its integrity are key. This can all be easily accomplished by establishing and maintaining a corporate repository that can later serve as a deal room.
2. Protect Your Interests
In addition to safeguarding financial information and the company’s confidential records, companies must ensure that the necessary protections are in place for any of the intellectual property that it owns. This will be incredibly important to prospective purchasers of the business, as the intellectual property is often at the heart of the company’s value. Patents must be properly obtained, copyright protections enforced, and trade secrets sufficiently hidden. Some of the safeguarding can be done by simply using highly secure technological solutions, but many of the items will require filing the right paperwork with the appropriate authoritative bodies.
3. Scrutinize Your Records
No one is going to want to buy a business that has mismanaged accounts or a history of shady dealings. As a result, company leaders must ensure that they keep meticulous records, and it is even better if an external professional conducts an independent audit to demonstrate that things are in order. It is always wise to do this well before entering into negotiations, as discovering these issues during the due diligence phase can be both embarrassing and deal ending.
4. Identify Your Value
One of the reasons that deals often go sour is because one or both parties have unrealistic or misaligned expectations. More often than not, this boils down to tension over the selling company’s valuation and other price-related matters. Before embarking on a sale of your business, your leadership team has to seriously analyze the sales price and terms it will seek and have frank discussions about the level of compromise they will be willing or unwilling to make. There is no sense moving forward unless everyone is on the same page.
5. Understand Your Market
In addition to misjudging the overall value of a business, many company leaders under or overestimate the company’s standing within the larger market. Unique business ventures or those that are in niche markets will obviously have more bargaining power when it comes to demanding top dollar. The key is to research and understand competitors in the space and to determine how your company can differentiate itself from the pack.
6. Adjust Accordingly
In the end, the best way to maximize your sales value is by perfecting your business model and ensuring that things are running in a way to generate handsome returns. This often begins by trial and error, but minor tweaking will likely be needed at various points along the way. Company leaders unwilling or unable to make the necessary adjustments are bound to lose out on the best opportunities, and holding on to a business for the sake of principle or sheer stubbornness will no doubt prove detrimental.