Are you thinking about selling your business? Are you imagining world travel afterward, or do you plan to start another business? Alternately, are you on a board that is analyzing the pre-sale decision?
In any case, an advisory service can enhance the sale process if they have experience guiding successful company sales. It’s vital that you read over the history of a consulting firm, read their case studies, look at their client list, and even interview their past clients.
Once you find one you’re comfortable working with, here are four steps for working with your corporate advisor.
Table of Contents
1. Start with Patience
The rewards of selling a business can be enormous. But be ready for the process to take somewhere around a year, just to find the right buyer, finish negotiations, and complete the sale. If you expect to make millions in a month, you might cut important corners, which could lead to a poor deal and losses.
You can make the process more efficient by turning many of the details over to an outside advisory service. Some firms can perform professional data gathering and analysis quickly because they specialize in it.
Find a consulting firm that has guided companies similar to yours through a successful sale. They can accurately present your value as an investment to potential buyers.
2. Decide on the Right Time to Sell
Do you know if it’s a wise time to sell or not? This question can require a trends analysis. Is your company category a hot seller right now? Find out if there have recently been unusually high multiples of EBITDA on sales of similar companies.
You can also look at the state of the financial markets. If interest rates are low, for example, buyers are willing to pay higher multiples. However, be sure that any success stories you hear are actually in the majority and not just reports of a few lucky ones.
An experienced advisory service firm can analyze the true value of your company, the state of the relevant market, and the history of similar sales to help you make an informed decision.
3. Use Respectable Accounting and Financial Processes
Smart potential buyers will thoroughly analyze your business, and that takes accurate, trustworthy data. They won’t always trust valuation reports and other financial reports generated by your company. They might only want to see reports prepared by an objective, outside firm, not by your own employees.
An outside advisory service that is qualified to create these reports, can inventory your assets, accurately value your organization, and much more. Their assessment of your earnings, cashflow, and overall value will be very important to companies who want an estimated return on investment from buying your company.
Your consulting firm may also use their reports and analyses to model different deal structures and advise you on the advantages and disadvantages of each.
4. Don’t Give Potential Buyers a Reason to Say “No”
Don’t engage with potential buyers until your sale is thoroughly researched, analyzed, and ready for presentation. If you chat with them about it too soon, before it’s in its most attractive state, those prospects can subconsciously say “no” to the sale and not want to look at it again later.
Don’t give them any reason to make a decision too early, and don’t give them a reason to dodge your calls. Wait for your advisory service team to be ready with a completed presentation of the exciting benefits of buying your business, then reach out to your ideal prospects.
The right advisory service can be a reliable partner through this whole process. Being sure you’re picking a respectable and successful one is a vital first step. Choose one that has a proven track record and expertise in your industry and your needs, and they’ll become an important member of your team.