10 Key Points For Selling Your Business

10 Key Points For
Selling Your Business

Representing business owners world wide from Vancouver, Canada
http://www.ck-globalsolutions.com/ +1 604 909-1271

10 Key Points For Selling Your
Business

• Every year, thousands of middle-market companies
change ownership.
• Although the reasons for selling may vary, the common
goal is maximizing proceeds from the sale.
• Far too often, many of these business owners do not
realize the full financial benefit from selling their company
because they are unprepared.
• This is a pivotal financial event requiring planning and the
marketing guidance.

Contactus@ck-globalsolutions.com +1 604 909-1271 http://www.ck-globalsolutions.com/

10 Key Points For Selling Your
Business

• Sellers who are well prepared will be positioned to
maximize the potential rewards and minimize the risks by
avoiding costly mistakes.
• Here are ten key points to remember when preparing to
sell your business:


Point 1) Prepare A Formal Exit Plan

• Every business owner will eventually exit his or her
company – either through a sale, transition or succession.
• Many owners are so involved in running their business that
they fail to prepare for their eventual exit.
• Exit planning takes time and requires a clear view of
objectives and careful consideration of options.
• A properly designed exit plan protects the net worth of a
business owner and maximizes the value of the business.
As a blueprint for satisfying personal needs and achieving
financial objectives, it places the business owner in control
of why, when and how to exit.


Point 2) Seek Professional Advice

• Selling a privately held business is often the largest and
most important financial event of the owner’s life.
• A successful sale of a business requires a carefully
planned and methodically structured process to maximize
sale price.
• Few owners are prepared to navigate this complex
process. The right professional intermediary can provide
invaluable advice, guidance and representation.
• The benefit of experience and an independent perspective
can maximize selling price and minimize selling time.


Point 3) Understand The Value of Your Business

• Value is not obvious, nor is it constant or consistent. The
value an accountant places on a business can vary
significantly from its value in an M&A transaction.
• One deals strictly with financial statements, while the other
considers the many subtleties that determine market value
– what buyers will ultimately pay.
• One focuses on past performance and the other looks to
the future.
• It is also important to evaluate off-balance-sheet assets
such as good will, customer lists, proprietary
technology, brand recognition, strategic strength, future
ability to grow and other intangibles.


Point 4) Sell At The Right Time

• Choose your exit time and avoid a forced sale due to
unforeseen circumstances.
• Costly mistakes can allow factors such as
illness, age, unplanned retirement and other similar
circumstances to dictate timing.
• Sell when the market is favorable to maximize business
value.
• Taking control of the process means being
proactive, knowing your personal life objectives, watching
the market and seeking the guidance of transition
professionals.


Point 5) Have Complete Documentation

• Quality documentation is essential to attract the right
buyers and answer their questions without delay.
• Documentation prepared from the perspective of potential
buyers can turn a company’s past into a valuable future.
• Complete and well-prepared documentation will present a
realistic, defensible foundation for the company’s value and
substantiate buyer expectations of future earnings and their
return on investment.
• It provides a basis for meaningful comparison with other
investment opportunities and a compelling view of how the
business is likely to perform in future years.


Point 6) Select The Right Buyers

• Care is needed with potential buyers you already
know, such as vendors, customers and competitors.
• Sophisticated industry buyers with strategic acquisition
goals are often willing to pay the highest amount due to a
strategic advantage to their current operation.
• Private equity groups, sophisticated buyers in the business
of acquiring companies, foreign buyers and industry
strategic buyers are typically the most desirable in realizing
optimum value.
• It is important to pre-qualify buyers and always use
confidentiality agreements before releasing critical
business details.


Point 7) Deal With Multiple Buyers

• Deal with multiple buyers when possible
• Multiple buyers create a competitive environment and a
sense of urgency.
• Without other prospects, the seller has fewer options and
limited leverage to obtain the desired price and terms.
• Multiple buyers can help maximize the market value of the
business and avoids a single buyer controlling a
transaction and weakening the sellers negotiating position.


Point 8) Understand Buyer Motives

• Understanding why a particular company may be
important to a buyer can be of great benefit to maximize
value.
• Gaining a clear perspective on how your business is seen
in the marketplace by potential buyers is critical.
• This helps with correctly pricing your business and setting
expectations.
• Many corporate buyers use acquisitions as a preferred
strategy for achieving expansion goals, improving
operating efficiency or increasing profitability rather than
building it internally.


Point 9) Emphasize Value, Not Price

• Focus on value, earnings potential and return on
investment.
• A carefully structured marketing plan that properly positions
the business in the marketplace, along with accurate and
current documentation and access to the right buyers will
all help to maximize market value –what a buyer is willing
to pay.
• Negotiating business value factors such as future earnings
potential, dividend-paying capacity, strategic advantages
and return on investment are invaluable to maximize
market value.


Point 10) Focus On The Future

• Focus on future performance, opportunities for earnings
growth and strategic advantages.
• Emphasize future potential and not just the past
performance of the business using multiples or averages
that can result in an unrealistic perception of value.
• Evaluate the company’s future earnings potential and its
ability to produce the desired return on investment.
• Explain the past and sell the future.


10 Key Points For Selling Your Business

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10 Key Points For Selling Your Business