Seven Ways to Prepare Your Business for Sale

07 Mar Seven Ways to Prepare Your Business for Sale

For some business owners, succession planning is a complex and delicate matter involving family members and a long, gradual transition out of the company. Others simply sell the business and move on. There are many variations in between, of course, but if you are leaning toward a business sale, here are seven ways to prepare:

  1. Develop or renew your business plan. Identify the challenges and opportunities of your company and explain how and why it is ready for a sale. Address what distinguishes your business from the competition, and include a viable strategy that speaks to sustainable growth.
  2. Ensure you have a solid management team. You should have a management team in place that is, essentially, a redundancy of you. Your leaders should have the vision and know-how to keep the company moving forward without disruption during and after a sale.
  3. Upgrade your technology. Buyers will look much more favorably on a business with up-to-date, reliable, and cost-effective information technology systems. This may mean investing in upgrades that make your company a ‘plug and play’ proposition for a new owner.
  4. Estimate the true value of your business. Obtaining a realistic, carefully calculated business appraisal will lessen the likelihood that you will leave money on the table. A professional valuator can calculate a defensible and marketable value estimate.
  5. Optimize balance sheet structure. Value can be added by removing non-operating assets that are not part of normal operations; minimizing inventory levels and evaluating the condition of capital equipment and debt-financing levels.
  7. Assemble all applicable paperwork. Gather and update all account statements and agreements such as contracts, leases, insurance policies, customer/supplier lists, and tax filings. Prospective buyers will request these documents as part of their due diligence.
