If you ask any professional business or M&A advisor “What is the optimal time to maximize the value for my business before selling?” The most common answer is – 24 MONTHS. In reality, it turns out to be more like 24 WEEKS as the owner is tired, anxious, and ready to make the change. One of my investment banker friends recently told me that never before has it taken so long to close a deal – up to 16 MONTHS with issues from both the sell and buy side. There is now more cash available than ever before and the time may be ideal for you. However, maximizing the value of your business requires proper planning and sound execution.
Are business owners willing to leave money on the table? Hiring an internal advisor to increase your value by $2-5Million seems to be a no brainer. The only caveat is that value creation does have a time factor. This investment will be well worth your time and money. Let me list a few things to consider:
- Streamline and document your business processes and systems so your employees have a guide and perform better
- Increase your utilization rate from 50-75% to optimally use your current ERP system
- Eliminate manual input into information systems wherever possible
- Understand your margins by product and services. It is the only way to eliminate waste and non-profitable areas that drain your resources
- Have a 2 year customer satisfaction and retention strategy plan to address issues with any problematic customers
- Re-organize your executive team for optimal advantage to a buyer
- Start with a Benchmark Assessment that compares your business to Best Practices to minimize your intrinsic risks
- The GAP Analyses from your assessment will indicate where to make immediate improvements and where improvements should be made over the next 24 months
It is certainly a daunting task to prepare a business for sale; yet not properly preparing for it would be a shame after all the years you spent building a successful Company. Every one of the above steps will add value to your business, and these are only a sample. The upside of being prepared is that you have more negotiating power with a potential buyer and the power to walk away from the deal.
Originally posted by Rudi Scheiber-Kurtz on July 30, 2014 at 6:30pm