Is Your Company Ready for Sale? - Part 1

Selling Your business is one of the most difficult decisions to make. However, having made this choice, your next step will be to determine what you can do to increase your company’s value in the marketplace. The best way to accomplish this is to address weaknesses and capitalize on strengths before entering into negotiations.

Preparing your business for sale is not an overnight process. It can take months - if not years - of planning to maximize your value. Always assume that any potential buyer will do a thorough job of due diligence, which will ultimately uncover weaknesses. Proper planning will identify current problem areas and help to determine how to treat them in discussions with buyers.

Factors Affecting Value

The phrase “timing is everything” is especially true when selling a business. In evaluating your company’s present position, outlook and capabilities, consider the following issues:

• Are the company and its products reaching maturity? Studies have shown that maximum value is achieved when a sale occurs while revenues and profits are still growing at or above historical rates.

• Can the company show a history of stable growth and profitability?

• Is the industry reaching a mature stage or experiencing rapidly changing technology?

• Are the products losing their uniqueness and/or is the company unable to make the commitment necessary to invest in new product development?

• Is there an adequate supply of raw materials and labor?

• Is competition likely to increase?

• Is the company at or near capacity, such that future growth requires significant capital expenditures?

• Does the company lack a well-defined strategy for future growth and profitability?

  Stay tuned for the next blog: Is Your Company Ready for Sale? - Part 2 - Recasting the Financial Statements