Pre-Sale Planning

Are you considering retirement or a sale of your business in the next 1-3 years? It is critical to have a confidential discussion to learn about ways to maximize your company’s value and ensure a successful transition. Actions you take now will have a profound effect on the wealth you generate upon sale.

Owners who plan their exit in a pro-active, systematic manner have the greatest opportunity to live the future life they desire, whereas owners who do not may find themselves with fewer options.

ABI provides valuable insight that can have a significant impact on the value of the business. By taking the time to make minor adjustments to operations, the chances of successfully selling the business can be improved significantly.

Following are some business considerations that can make a big difference:

The best time to sell is when a business is doing very well and there are no time constraints.

  1. Get Organized
    • Financials: Buyers and financing institutions need 3 years of complete and accurate Profit & Loss Statements and Balance Sheets, organized business records such as sales and expense reports and tax returns should be maintained. Remove or buy off any assets that are primarily for personal use.
    • Advisor: Hire a CPA to review the books – poor financial tracking presents more risk to potential buyers and thus reduces the value of the business.
    • Records: Document all job descriptions, operational processes, and strategic plans. Records and plans allow buyers to continue a business’s successful growth and will help them obtain financing to buy the business.
    • Inventory: Your inventory must be both current and salable. If you have stale inventory, sell it, give it away, or simply throw it out! Inventory value often provides a contentious point with potential buyers.
  2. Develop Key Employees and Promote Management Depth
    A Buyer will look at the quality of management and staff as a value driver. Having a key employee who is critical to the operation of the business is risky for a Buyer. If that person leaves the company, the business may be in jeopardy. When the owner is still effectively running the company alone (thus can be considered the key employee) it is especially important to distribute important responsibilities and diversify employees’ skills (cross-train). Involve these staff members in the decision-making processes. Demonstrating the company’s success relies on capable, well-trained employees – not just the owner or other key employee- and it will pay off at the time of sale.
  3. Identify Value Drivers
    What is it that makes the business unique? Analyze these factors with a professional advisor and work diligently to develop and improve them. View the business from a Buyers perspective.
  4. Clean Up Facilities
    The appearance of the business is extremely important – a neglected facility can compel Buyers to walk away from a deal or make low-ball offers. “You never get a second chance to make a first impression.”

Common personal questions are also important to consider.

  • What will I do with myself after selling?
  • Will I receive enough money to meet my financial objectives?
  • How should I manage my high dependence “and that of my family” upon the stock of only one company – my own?
  • What will my tax obligations be when selling?
  • What should I do with the money I make upon selling?
  • How much will we have to live on, and how much will we have left for our families?

Our Approach

We can offer company owners deep resources to guide the planning process.

Also, we encourage company owners to allow us to form a team with the company’s accounting, legal and other advisors early in the process of positioning for sale. If company owners do not have relationships with advisors, or if the advisors are not experienced in dealing with the sale of privately-held companies, we can refer highly credentialed, experienced resources.