Preparing your business for sale is a strategically important exercise. It is something that you should do all of the time. Being ready to sell is important, regardless of your interest in selling. It is a basic discipline of owning a business. You must know and monitor the street price of your company to inform your operating decisions. Being active in mergers and acquisitions (M&A) conversations is a great way to keep your eye on the ball and find successful deals along the way.
Your likely buyers are often active in the M&A arena. The largest M&A growth brokerages in America have a handful of deals in the hopper at all times. You want to be as prepared in the selling process as the most seasoned buyer.
The preparation for sale can take three months, six months or up to a year – depending on your operations, financial books and records, key roles, job descriptions and key performance indicators (KPIs). The seasoned buyer will expect full transparency into the business and will apply discounts to a purchase price for lack of transparency—the lack of transparency translates into risk categories for the buyer. An unprepared seller also extends the transaction timeline, which also reduces the value of the company. If a company’s goal is to buy $40 million of brokerage growth, they are going to prefer faster closing times, and even pay a premium for that.
A close examination of your business, before you engage in the selling process, will pay-off by a factor equal to your valuation multiple. The value of your business as a seller is a multiple of earnings. A simple hundred-thousand-dollar adjustment in your operating expenses can turn into three hundred to five hundred thousand dollars of proceeds . Make your dollars count.
We have decades of experience reviewing and operating companies, making accretive observations and recommendations for improved performance which directly translates into incremental proceeds. More than happy to have a chat with you about this. For more information, visit https://www.wavgroup.com/.
Like so many other aspects in life, victory favors the prepared!