The Business Exit

When owners are considering the sale of their company, there are two important questions they should ask: What is my company worth? and Who are the best buyers? The answers to both questions are subjective and can vary from time-to-time. Company valuations are dynamic based on a variety of factors outside the owner’s control (hence be…

Business owners know a lot about their companies, right down to the minute details of their day-to-day operations, customers, marketing, payroll and personnel. However, they often do not know one of the most important details of all — the value of their company if they were to market it for sale.  The concept of fair market value can be difficult to assess…

Want to increase the value of your business to potential buyers? Make yourself dispensable by building a strong management team that collectively is knowledgeable about every facet of the company.  You are probably saying to yourself, “easier said than done.” Understandably so — it is nearly impossible for an entrepreneur not to be ingrained in every facet of their business, from facilitating sales to cultivating…

Solicited and unsolicited calls should be expected when putting your company on the market. Regardless of the potential that the caller may or may not enter the buying process, you as the current owner and seller should consider the pros and cons of negotiating with prospective buyers. The “transitional organized sale process” can shift to…

Most owners are bombarded with calls from brokers, investment bankers, and other business owners inquiring about whether the owner would consider selling their company. These calls are received on a monthly and weekly basis, if not daily. There are a variety of ways to handle these calls based on the owner’s current thinking regarding the…

As owners consider their succession options, one strategy is a management buyout (“MBO”), i.e., the sale of the company to the management team. There are a number of progressive indicators that a management buyout may be a viable option for the owner.  Along the way, hopefully, the owner has begun to determine the fair market value of the company, required sale price, and potential acceptable terms. In fact, the owner could provide specific…

The owner’s transaction conclusion is entirely personal and should reflect the option that would best meet the needs of the owner today, tomorrow and in the future. As an owner selling their company, the thought process behind considering the sale of your business can be described using the flip of a coin. One side of…

One of the first questions that buyers will ask a business owner is: “Why are you selling your company?” Rest assured, one way or another, directly or indirectly, buyers will ask this question. The answer to the question is personal to the owner and it must be articulated in a way that is convincing and consistent. The owner should prepare a strong answer to the question before beginning a sale…

Non-core assets should be removed from the business to provide buyers with a clear understanding of the balance sheet. In the process of preparing your company for sale, it is crucial to “simplify the story” behind financial projections and various budgets. Simplifying the story means reducing the number of items that must be explained to buyers…

As noted in Part 1 of this two-part series, committing the business owner’s knowledge of the company to a thorough, detailed budget addresses numerous questions and increases credibility with buyers. Similarly, formalized multi-year projections are instructive since they provide insight into the business owner’s view of and plans for the future. Business owners often say “I…