The Critical First Step in How to Sell a Business

By Generational Equity

09/04/2018

You have decided that this is a good time to sell your business – now what?

Odds are good that unless you have bought or sold a company before, the “now what” in this decision is intimidating.

In fact, based on our work helping hundreds of clients exit their businesses, it is so intimidating that far too many business owners put off even taking the first step until external circumstances force them to.

That doesn’t create an optimal scenario if you want to maximize the ROI in your business.

The reality is now is a great time to sell a company. A recent article in Mergers and Acquisitions magazine stated:

“Worldwide M&A activity totaled $2.5 trillion of announced deals in the first half of 2018, an increase of 61 percent compared with the first half of 2017, making it the strongest first half in deal value since records began in 1980, according to Thomson Reuters.”

How to Sell a Business: The Key Steps

Here are some key steps for you to ponder as you consider the “now what” of selling your business soon:

• Hire an M&A advisory firm
• Provide your advisor with at least three years of complete and accurate financial statements
• Listen to the advice they give you regarding how to enhance the company’s valuation while they are actively marketing it
• Focus on effectively running the business while your advisor is marketing it
• Stay the course as offers come in because many may be far below your valuation
• Work with your advisory firm to pick the optimal buyer for your business (and you)
• Stay composed during due diligence and negotiations – don’t take questions personally
• When the deal closes, be prepared for a wide range of emotions that may impact you
• Most importantly, the best first step is to attend a complimentary Generational Equity exit planning conference.

I cannot stress this last bullet point heavily enough. Even if you don’t hire us to represent you, the knowledge you will gain from attending our exit planning conference will enable you to effectively market your business on your own.

How Will This Help Sell My Business?

The methods we teach have been proven over and over and over again with each deal we close. We advocate what we call the “Professional Process.” This is a 16-step program, which will greatly enhance the odds of selling your company – if you follow it.

Here is the typical agenda of one of our executive conferences:

Business Valuation

• Building value vs. growing a business
• Value myths exposed – The truth about multiples, book values and more
• How savvy buyers take advantage of unprepared sellers
• Interest rates and their impact on selling price
• Exit strategy and timing
• Presenting your financials properly

Packaging Your Proposal

• Seeing your business through the eyes of the buyer
• Explaining your company's past; documenting its future potential
• Creating your ‘document of value’

The M&A Sales Process

• 16 steps to take you from the start of the exit process to a successful close
• Common and costly pitfalls to avoid

Common Seller Mistakes

• Selling to the wrong buyer
• Not knowing the value of their business
• Following the amateur process.
• Computing the Value of Your Business
• Demystifying M&A jargon – CAPM, discount rate, beta factor, terminal value and more

Identifying and Accessing Buyers

• How to identify and approach the right buyers
• Which buyers to avoid and why
• Why big companies buy small companies
• How to even the odds when dealing with sophisticated buyers who purchase several businesses each year
• Why your most likely buyer may not be the best buyer

Negotiating and Structuring the Deal

• Negotiating mistakes to avoid
• How professionals may get the best price in the shortest time
• Managing multiple buyers to obtain the highest possible selling price
• Deal structures designed to give you more cash with less risk

Forms of Payment

• Increasing your total purchase price through stock, royalties, license fees and consulting fees
• Making your business "pay you" even after you exit
• Important legal and tax considerations
• Protecting your lifestyle and estate needs

If any of these topics are new to you, or if you just would like to add more to what you already know about how and when to sell a business for maximum value, attending one of our conferences could be the best first step in your exit journey.

Attend an Exit Planning Conference Near You

Even if you have not decided that now is the time for you to sell and that you will likely exit in 5-10 years, attending one of our conferences will help you be ready at that time because the key to an optimal deal is building a buyer-ready business in advance. It’s never too early to start planning for your exit.

To find a conference near you, use the link below and contact us if you want to learn more:

• How to find a conference near you
• What our clients say about their exit journey with us
• How to contact us for more information

By Carl Doerksen, Director of Corporate Development at Generational Equity.

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