Business values are rising, and buyers are gaining confidence. But businesses still must take proactive steps to prepare themselves to get the maximum return from a sale. Though maximum value obviously means the highest possible price, it’s important not to overlook the role of personal goals. You don’t want to regret the sale down the road. Here’s how to maximize value—not just net proceeds from the sale.
Devise a Plan for What’s Next
As an owner, your life revolves around the business. Don’t focus solely on running or selling the business without planning for the future. To avoid regret, you must have a clear vision for what comes after the sale. Perhaps you want to retire. Maybe the plan is to start another business. Maybe you want to pursue a part-time job in a field you love. A clear plan for the future maximizes the personal return you can expect from the business’s sale.
Set Realistic Value Expectations
Differences in price expectations between buyer and seller can cause sales to fail. You’ve spent years at your business, building it up with lots of hard work. But hard work has little value to a buyer. The buyer may also fail to understand the business’s full value. Before beginning the sale process, evaluate the business through the eyes of a buyer. An objective view from someone who isn’t familiar with the business can help you stay ahead of the process, identifying potential issues that may come up during due diligence.
Make Due Diligence Easy for the Buyer—and for Yourself
You might know all there is to know about your contracts and finances. Buyers want hard proof. They have limited time during due diligence to learn all they can about the business they hope to invest in. Make the process easy by preparing ahead. Gather relevant data and paperwork before the sale. Be prepared to answer detailed questions quickly and confidently. Not only does this instill confidence in the buyer. It can also prevent downward adjustments in the sale price, and protect the deal from failure.
Go in With Eyes Open
You know how to run your company. You might not have experience selling one. This might be the only time in your life you ever do it. So, while the process varies based on the complexity and size of the business and the goals of the buyer, you must consider the key components of the transaction before you begin negotiating.
You don’t need to be an expert, but working knowledge of the terminology and anticipation of potential concerns can give you the necessary confidence to make sound decisions. Hire an expert team who can help you navigate the process. Preparation is key. By preparing yourself with education about the process, you can leave the business you’ve poured so much of yourself into knowing that you got the most you could out of it. You’ll also leave the business itself in good shape.