The Business Exit

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…

Let’s face it. Preparing a monthly budget and multi-year projection is hard. It can take several years to determine the best way to prepare them. If the business owner has not historically prepared a budget pr a multi-year projection, learning to do several years prior to a sale process will be very constructive. Specifically, it…

Within the bounds of preparing for sale, the preparation of internal accounts is paramount to ensuring that all financial and potential projections are as accurate as possible. Consider this scenario: Your receive an unsolicited inquiry from the ultimate buyer for your company. This buyer represents the best business fit, is informed about your company’s products…

The relationship between financial planning and the sale of your company helps to outline the importance of completing a business valuation during the planning process. Various approaches and considerations must be taken to determine business value. though it is within best practices to remember that market activity can vary from company to company and industry…