Do you recall going on your first date? You probably spent a little extra time on your hair, shined your shoes, and ironed your shirt. The same attention to detail should be considered when preparing your company for sale. Just like a first date, the first impression matters. Before engaging in discussions with buyers, business owners should carefully prepare for a sale with these key tasks:
Get your financials in order: Having clean books and records not only provides potential buyers a level of confidence, but it also shows that you have a good handle on your operation. Your accounting team should strive to comply with generally accepted account principles (GAAP). This ensures consistency and accuracy across your various statements. Audited financials are usually preferred, but many small businesses do not require that level of review by an outside CPA.
Educate yourself on the market: As you can imagine, most business owners believe their business is worth more than the general market. Years of blood, sweat and tears can certainly create this bias. We can crunch numbers and debate valuation all day long, but at the end of the day your company is only worth what someone is willing to pay. Every company has its unique value drivers and dingers to consider during negotiations.
Clean-up: Literally, clean the place up. Most buyer groups want to visit the facility prior to submitting an offer so they can get eyes on the assets they are purchasing. Make sure your facility is well lit, the interior is freshened up, and there is energy buzzing through the building. Regardless of whether you are a large manufacturing facility or a small service business, give the place some TLC.
Understand estate and tax consequences in advance: Prior to a sale, connect with your tax advisors and/or estate planner to make sure the legal structure is in place to manage your tax liability appropriately and protect your assets post-close. It is important that you seek counsel from experienced advisors in each discipline – not all corporate attorneys or CPAs specialize in transactional matters.
The list goes on, but know that it is important to get your house in-order if you expect to maximize price and terms for your business. For a personalized look at what your specific company needs to prepare for a sale, please give us a call - 704.295.0102.
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