DALLAS, December 17 /CNW/ - Homeowners won't have much luck selling a
house right now, but it's an entirely different story for business owners.
Despite recent credit market turmoil, owners considering a sale are finding a
favorable climate. The cyclical mergers and acquisitions industry is very
strong right now, and owners may receive 15 to 50 percent more of the
company's enterprise value in today's market.
Whether or not you're considering the sale of your business, it's always
good to be prepared. Start off in the traditional New Year's fashion--with a
few resolutions. Here are eight resolutions for 2008 that every business owner
should keep in mind.
1. Get organized. Well-organized company information and financial
documents will make any company more attractive to potential buyers. Owners
should make sure tax returns, balance sheets and income statements as well as
information on the company's customer base, suppliers and employees are up to
date. Having these in place will help to increase the value of the sale and it
will help the sale process move quickly, too.
2. Don't try to do it alone. There are many nuances to selling a
business. Enlisting the help experts such as lawyers, accountants, financial
planners and bankers can help ease the load and ensure common mistakes aren't
made. Their professional advice and experience can help you get the best deal
possible, on your terms.
3. Have a valuation. Business owners may think they know what their
business is worth, but more often than not, owners' estimates are
significantly askew. A company's worth to a potential buyer is linked not only
to assets like cash, inventory, equipment or buildings. Its worth is actually
a combination of assets and goodwill (the new owner's ability to make a profit
in the future) and market conditions. A professional valuation done will
determine the company's enterprise value against all variables. Business
owners should make sure get a valuation update each year.
4. Know your buyers. Owners often think they know who would be interested
in buying their company. They likely think that the best buyer is a
competitor, family member or current employee. This is usually not the case,
and thinking so is limiting. Here's why: many companies won't pay a premium
for a direct competitor--the likely already have the resources you do and
therefore don't need what you have to offer. Family members aren't likely to
give an owner the best price; nor are current employees or management.
Potential buyers for any business are usually public and private companies,
foreign buyers and private equity firms.
5. Make yourself more attractive to buyers. When you're selling your
business, an owner is selling the future, not the past. Unfortunately, buyers
aren't interested in the long hours and hard work someone put into building a
company; they're interested in maximizing their investment. One way to make
your company's future more attractive is to develop a forward-looking budget.
The more a buyer knows about the costs and income they can expect in the
future, the easier it makes their decision.
6. Keep quiet. Whether a business owner just thinking about selling his
or her company, or they are deep in negotiations, when it comes to details of
a sale, it's always best to keep quiet. For instant, by letting people know
the company's enterprise value, the owner has set the limit in negotiating a
deal. Instead, he or she should let the buyers establish a starting point.
Also, consider this tale of a business owner who tells a trusted employee
that he's thinking of selling the company. The next day, the employee
innocently tells a family member, who also tells a friend. A week later the
business owner hears the rumors that the company's for sale, creating
uncertainty and uneasiness among clients and employees alike. Either way,
slipped information can hurt a business owner as a sale approaches.
7. Make plans. A good solid succession protects the company's future
vitality of the business by ensuring a smooth leadership transition. For that
reason, it gives both sellers and buyers peace of mind. A buyer wants to know
that after the sale, there will be someone available who knows how to operate
the company and has relationships with clients and distributors--permanently
or at least through the transition phase.
Additionally, since business owners' personal net wealth is often tied to
their business, those seeking to maximize the influx of wealth after a sale
also should consider creating a wealth plan. And a preliminary wealth audit
can help owners decide if they're even ready to retire and what sale value is
necessary to maintain their lifestyle in retirement.
8. Have patience. Throughout the entire process of selling a business,
patience is a virtue. The process of evaluating a business, bringing it to
market, finding the best buyers, negotiating and closing a deal, and
transitioning it to the new owner can be a long one. The entire process often
takes several years. And the transition can take even longer. Time and
preparation is necessary to ensure an owner gets the maximum value for his or
her business, and patience will only help the process.
About GW Equity
GW Equity, a Generational Wealth and Equity company, assists closely held
and family-owned businesses in completing mergers, acquisitions, divestitures
and strategic growth initiatives. GW Equity has more than 300 professional
advisors and affiliates nationwide and is headquartered in Dallas, with
affiliate offices in New York, Chicago and Irvine, California. For more
information, contact GW Equity at (877) 213-1792 or firstname.lastname@example.org, or
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For further information: Edelman Erica Studl, 312-240-3364