“I’m not ready to sell now, but maybe in a few years.”
Most Business Brokers run when they hear this, but I am not a typical broker. When I hear that a sale is a few years down the road, it is music to my ears. It gives me the opportunity to help a business owner maximize hher or his proceeds down the road when they do finally sell.
I offer a variety of complimentary services to business owner’s who are nearing an exit with their business.
Here is my 7-step plan to maximize your proceeds:
1. Establish the Baseline Value of Your Business Today
Realistic expectations about the value of your business are a crucial element of having a successful transaction. What’s your business worth? Ask me to complete a valuation and let’s see what it would bring if sold today. If it’s not the number you had in mind, there is still time to improve the value. I can provide guidance on what needs to be addressed between now, and sale time.
2. Benchmark Your Business vs. Similar Businesses
How does your business compare to similar businesses? When I was a business owner, I wish I knew about the resources that a Business Broker has available. Reviewing your results versus other in the industry is eye opening, and can help you focus on your goals. Here are a few of the benchmarking tools I can provide:
– Sale Comps
– Listing Comps
– Business Reference Guide (Expert Insight about your industry)
3. Meet With Your Broker Annually
Meet with me each year after the initial valuation to review results of your year, update the valuation, and establish this year’s goals.
4. Eliminate Red Flags
Here are just a few examples of issues that can red flag your business in the eyes of a buyer or buyer’s lender. I can review your business and identify these so that you have time to make them a non-issue before the sale.
– Marketability
Let’s review sales of similar businesses to be sure your business is desirable to buyers. If it’s not, we’ll discuss a plan to improve it’s marketability
– Exit / Succession Plan
If something were to happen to you suddenly, would your business survive? If the answer is “no”, then we need to talk about a succession plan.
– Everything On The Books
In the last three tax years prior to a sale, be sure all of your income and expenses are on the books. Saving a nickel now can cost you a quarter when you sell.
– Limit Excessive Personal Benefits Expenses
Buyer’s gravitate to “clean deals”. If there are too many footnotes and “add backs” in your Financial Recasting, it’s going to be a much harder sell.
5. Understanding Net Proceeds and Your Tax Situation
Discuss the future sale with your Financial Planner, Accountant, and/or Attorney so that there are no surprises. Different legal entities are taxed in different ways when they are sold. If you need a certain “net proceeds’ when you sell, it’s best to understand what will drive that value long before the sale so that you can prepare accordingly.
6. Maximize “Owner’s Benefit” and Revenue
Buyers and lenders typically look at three years of business tax returns when they are valuating your business, and the final year is the most important. You will want to maximize your “Owner’s Benefit” leading up to the listing. Let’s examine strategies to do this.
7. Sell High
“I can’t sell now, I’m making too much money!” Is it wise to wait until you are not? Like any asset, you want to sell high, when it is most desirable to a buyer. We can discuss what internal and external factors affect your industry, seasonality, cyclicality, elections, and other factors that can influence your sale timing.
Contact me today and let’s make an appointment to discuss how I can maximize your net proceeds on a future sale of your business.
