When pursuing a company sale, there are a few important points to consider.
Always Develop a Competitive Environment
No other factor maximizes the value of your business more than having multiple buyers creating a competitive environment. The best way to create a competitive environment is to engage in a professionally managed company sale process.
Note that it is typical to receive multiple offers from prospective buyers and that the highest offer may be one to two times the lowest offer. That is why you want to run a competitive company sale process…to ensure you get the highest price.
Prepare. Prepare. Prepare.
Prepare the business for a sale. Make sure all loose ends are tied up so you can present it in the best light possible. Prepare compelling marketing materials so buyers take interest. Also, prepare your personal situation, including family matters and your financial plan to accomodate the company sale.
Never Go To Market with a Business Valuation in Place
Traditional valuation methods are fundamentally flawed and almost always seriously undervalue a company. Never put a value into the public domain, it is a costly mistake.
Always Sell Future Potential – the Sizzle
The company’s history is the "steak", something a buyer can sink its teeth into. However, buyers pay a premium for future potential, the "sizzle". Make sure the sale process is focused on highlighting your company’s unique business plan and future prospects.
Always Look Outside Your Niche
It is crucial to look outside your own niche if you want to maximize value. The best buyers are often not competitors, but complementary companies, which are not in your niche currently, but value your market position. For example, they may sell to the same customers that you sell to but their products and services are different than yours.
Wilcox Swartzwelder & Co., investment banking experts for middle market companies in the energy, industrial and infrastructure sector.
Tags: tips on selling a private business, M&A advisor, sell a business, sell a company
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