Looking to sell your business this year? That’s exciting news – for about five minutes – until reality sets in and you need to figure out what’s required in order to sell your business to the right investor at the right price!
ActionCOACH is highly experienced in helping business owners sell businesses, and in this blog they share their 3 proven steps to get organised and get a great price on your business within a year.
Firstly, be aware that to get the best sale value, it takes a good year of preparation before you even put your company on the market. Savvy investors will see that you took the time to plan for the sale, and will shortlist your business immediately, in front of businesses who will make the buying process too difficult for them.
Step 1. Prepare your financials
Over the next year, run your business with accurate financials, keep your paperwork up-to-date and document everything. Outline the responsibilities of each job and include KPIs that clearly establish what is expected of each player and group. ActionCOACH has an extensive checklist to help you get your financial data in shape. Call us today on 02 9146 4439.
Step 2. Investigate potential buyers
Investigate who your potential buyer could be, and how to best position your company to get the most value in the marketplace. There are basically two types of buyers: Those who are looking to buy a business that needs work, and those looking to buy themselves a job. To get the best sale value, look for an investor who wants to take the business to the next level, and who can work with your current team and systems. These buyers are usually willing to pay more for a business that already have effective systems in place.
Get familiar with how businesses in your industry or category are valued. Different industries use different multiples. Some use multiples of profit, some revenues, and others cash flow. Sometimes, your database is the biggest asset you have, although you may be in a business where stock and inventory levels will figure into the equation as well. Knowing what you have to work with, or need to focus on, will give you confidence in putting together a solid informational and sales package for prospective buyers. For more detail on how to value your business, read our previous blog here.
Step 3. Create your sales kit
Buyers will want to access information as part of their own due diligence, and the more information you can provide in a ‘kit’ the better and easier the sales process will be. Include these items:
- Samples of all of your marketing materials
- An overview of your financials
- Contracts for your team
- Inventory of your assets
At this stage, try to be patient. Around 30% of deals fall through in the due-diligence phase of the process. While all of the prep work can be exhausting, the more work you can put into positioning and ‘packaging’ your business, the quicker and easier the sales process will be, and the more value you’ll get in return.
Contact ActionCOACH today 02 9146 4439 so we can get you on track to sell your business for the best possible value. Or download a copy of the eBook Selling your Business here.