Insights

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Are You Ready to Sell Your Business?

 

Selling a Business is Similar to Selling a Home

A few years ago, close friends decided to sell their spacious home. The kids had left. Upkeep was now a burden. So, they set off on the journey many of us have traveled—replacing leaky faucets, tightening loose doorknobs, and knocking out a punch list of updates so they could get in the market and sell their home for top dollar.

When the time came to select a realtor and get on the market, their agent mentioned how impressed he was. They had done the hard work, and the end result would be selling in only a few months for a high valuation in a tight market.

When it comes to starting, building, and scaling a company, the experience is quite similar to selling a home. The owners who’ve planned in advance typically see the best results.

 

Getting Your Business House in Order

Running and growing a business is not for the faint of heart, which often means it’s hard to keep up with all the things that need to be managed. Systems, processes, documentation, routine maintenance—all these areas and more can easily fall by the wayside but are also some of the pivotal points of preparation when looking to maximize a sale opportunity.

Remember, most business owners get one opportunity to sell. It’s important to make the most of the moment.

Here are a handful of straightforward steps to consider when preparing a business for sale.

 

3 Key Areas to Sure Up in Advance of a Merger or Acquisition

#1: Deferred Maintenance

Just like home ownership, putting off routine maintenance or updates is common as entrepreneurs like you and me have a knack for simply adding it to the punch list of things to eventually knock out. Here’s the thing: first impressions matter. A company with well-maintained facilities and equipment signals to prospective buyers that your team is on top of things.

#2: Clean Financial Statements

Potential buyers need confidence in their upcoming investment in your business. Nothing gives them greater comfort than clean, organized, professional financial statements. This shortens the due diligence process and positions you to maintain the highest leverage during negotiations.

#3: Contracts and Agreements

Create a master list of all contracts and agreements. This should cover vendors, customers, leases, employee agreements, licenses, and more. Make sure everything is neatly compiled and organized. In a sale situation, buyers need to understand what obligations are on the books, and which items need to be transferred or re-negotiated because of the transaction.

 

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Planning Ahead Always Benefits Your Business

While there are many action items to get your business house in order, the main takeaway here is that failing to plan ahead can lead to frustration, delays, and missed opportunities.

Even if you have no intention to sell right away, remember that still operating your business like you do has many additional benefits (and virtually no downside).

Should you never opt to pull the trigger, the items above (and these resources) still set you and your team up for greater success both today and tomorrow.

Pro Tip: DIYing your one shot at a sale has some serious potential drawbacks. With so much at stake, consider partnering with a trusted private investment banker, like Allegiance Capital, to help navigate the process with certainty.

Free Email Course: Selling Your Business with Confidence

Join us for a 12-week, step-by-step email course to help you determine if you’re ready to sell and how to make that transition a reality.

Enroll in the Email Course

 


 

Shane Mahmood

Shane is a managing partner here at Allegiance Capital, helping entrepreneurs and business owners run, scale, and (when the time’s right) sell their business. Prior to joining ACC, he served in the U.S. Army and now uses that experience to fuel his service to others both in and beyond the Dallas-Fort Worth community.