As a private business owner, you may at some point consider selling your company. Whether your company generates $1mm of EBITDA or $30mm of EBITDA, it’s important to be well-prepared for a successful transaction. At Astria Group, we specialize in providing a range of advisory services to help you achieve your strategic objectives. This may include advising on a potential transaction, but our focus transcends purely consummating a transaction. We realize the importance of preparing your business for a sale so that you can maximize value and achieve your business objectives. Our team includes accomplished entrepreneurs, investors, investment bankers, and operating partners who each offer specialized expertise and add value to our process. This approach allows us to offer a more comprehensive range of services than traditional business brokers and transaction advisors, enabling us to provide a broader range of solutions than many other advisors. We also have a unique focus on value maximization through operational improvement, thanks to our team’s extensive operating experience. Here are the top things to consider once you’ve decided to sell your business in order to be as successful as possible:
Understand Your Company Inside and Out
Many owners know how to run their company, but they don’t know how that translates to the financial statements and qualitative questions that buyers will have. Furthermore, many owners run personal expenses through their company, or structure expenses and depreciation schedules in a way to minimize taxable income. Once it’s time to start thinking about a sale, it’s also time to clean all of these items up so that they are understood and can be coherently classified (with supporting information) when a buyer starts to dig into the business. Some owners actually already do this, but far fewer I’ve observed know their business from the outside. This goes hand-in-hand with #3 but think of this as the macro understanding versus the micro.
Bringing on Support to Increase Bandwidth and Deal-Making Experience
Once you’ve decided to sell and you’ve done some initial legwork to prepare the business, it’s time to talk with an expert to move to the next level. Many owners originally think they can get through a deal with their own staff or even just doing it themselves. This is an absolute rarity, and here are a few reasons why:
- Running a business is time consuming, selling a business is even more so. It takes a lot of bandwidth, and you’ll want to ensure that you have the right team to support you.
- Most owners don’t have the experience in deal-making that an expert has. You’ll want to bring on someone who has been through the process before and can anticipate issues before they come up.
- An expert can help you navigate the complex process of selling a business and ensure that you get the best deal possible.
Understand What Buyers are Looking for
You’ll want to understand what buyers are looking for in a business so that you can highlight those features and make your business as attractive as possible. Some of the things buyers look for include:
- Strong financials: Buyers want to see that your business is profitable and has a track record of growth.
- A solid management team: Buyers want to see that your business has a strong management team in place that can continue to run the business after the sale.
- A solid customer base: Buyers want to see that your business has a solid customer base that is likely to continue to do business with the company after the sale.
- A clear growth plan: Buyers want to see that your business has a clear plan for growth and that there are opportunities for the business to continue to grow after the sale.
Clean up Your Financials
As mentioned earlier, it’s important to make sure that your finances are in order before you start the process of selling your business. This includes reviewing any add backs and adjustments to earnings and removing any seller discretionary items that are suppressing the profitability and value of the business. This process, also known as a sell-side quality of earnings review, can help improve the value of the company. It’s also a good idea to add a bit of runway to the process by optimizing operations and financial performance. This can go a long way towards improving the transaction success and the value of the transaction.
Prepare for Due Diligence
Once you’ve identified a potential buyer, the next step is due diligence, where the buyer will thoroughly review all aspects of your business. It’s important to be prepared for this process and to have all relevant documents and information organized and easily accessible. This will make the due diligence process go more smoothly and increase the chances of a successful transaction.
Negotiate the Best Deal Possible
The final step in the process of selling your business is negotiating the best deal possible. This can be a challenging process, and it’s important to have the right advisors on your side to help you navigate it. Transaction advisors like Astria Group can assist with negotiations and help you achieve the best outcome for your business. Statistics show that having the right advisors can significantly improve the transaction value for the seller.
In conclusion, selling a business is a complex process that requires careful preparation and the right team of advisors. By following these steps and working with a reputable transaction advisor like Astria Group, you can increase your chances of a successful transaction and maximize the value of your business. Contact us today to discuss your specific needs and embark on a successful business sale journey.