Sell your business successfully
To successfully sell your business, start with advanced preparation. Write Brian Bergin and David Tynan of PwC.
With a cool eye on historical financial results and business maturity, potential sellers can maximize economic returns. Therefore, it is essential that the preparation phase starts well before the scheduled release (eg 18 months).
It is important that the seller looks at the business through the eyes of a potential buyer. Homeowners may not have the impartial ability to make an objective assessment of the health and overall value of the business, and any emotional bond needs to be tempered by harsh realities.
Start the process
To begin, you need to determine if the underlying financial records provide a complete picture of the total value of your business. While they are compliant with the audited accounts, it is important to step back and see if there are other intrinsic areas of your business that create value, for example. Key relationships with suppliers and customers. Conversely, it is important to determine if certain aspects of your business are below average or lose money. Difficult decisions must be made early so that appropriate and timely corrective action can be taken.
Ensure a smooth transition
You need to be aware of the potential impact of a task on other key stakeholders such as employees, customers, and suppliers. Focus on a smooth transition to a new property. It is imperative that the engagement of key personnel be ensured through open and honest communication. If possible, it is good that there is a transitional period when sellers and buyers work together to register in the new ownership structure. Entrepreneurs often want to be actively involved in the business, and the buyer can do so at least during the transition period.
Consideration should be given to determining the optimal time to communicate with key customers and suppliers, and to give the opportunity to transfer important contractual arrangements to the buyers.
Appreciation of the company
Prior to placing on the market, an independent evaluation of the company must be sought. This helps you to meet your expectations in an emotional process. Most transactions are generally based on EBITDA (earnings before interest, taxes, depreciation and amortization). It is therefore important that all one-time revenue and expenditure be determined at an early stage of due diligence.
Negotiate the sale
When you start sales negotiations, you must clearly define your original terms, especially the price definition. For example, it is normal for working capital to remain in a business. However, this should be clarified. Remember that companies tend to be debt-free. This means that the seller retains all his cash and pays for it at the end of his execution. Note that the seller considers some bonds as “debt-like” debt, which is classified as a balance sheet liability because it seeks a price reduction.
Controlling the information for potential buyers is essential, especially when multiple teams review the activity. Keeping the messaging consistent and ensuring that all parties receive the same level of information improves the transparency of the process. Consider creating a pre-verification package for vendors that needs to be delivered to bidders instead of performing a detailed task in a computer room.