Growing Your Business For Sale
Growth
Is your business growing? Or has it stagnated? It goes without saying that a growing business will look much more tempting to a buyer, so it’s important that you keep that in mind.
But what do we mean by growing? Simply put, your business is turning over more every year and profits are growing. The percentage at which your company is growing is a factor too, but what looks good to a buyer changes depending on the industry you’re in.
As we’ll discuss in the next section, timing is crucial when it comes to a business sale so you may want to consider selling during periods of growth.
Goals
Buyers will want to see that you’ve got a plan for your business going forward, that you’re still passionate about its success and you’re not selling your business because you’ve lost your confidence in it.
Having a strategy and goals for the future of your business will go a long way to showing any prospective buyers that your business is prepared and that there are opportunities to grow and scale it further.
Team
How strong is your leadership and management team? Do you have one in place?
Buyers will want to see that once the business has been sold to them, and you as the business owner have left the company, that the team you leave behind is both invested in the future of the company, and more than capable of taking it forward.
Having a strong team in place will greatly reduce the impact on the business post-sale, and allow the business to continue largely as normal. That makes your company much more attractive to any potential buyers.
Businesses that rely on their owners are businesses that don’t sell. If you are the owner of your business and you are crucial to its success, then you’re going to need to make some changes.
Essentially, the company needs to be able to run as successfully without you as it does with you. So think about who can take on additional tasks and responsibilities within your company, and how you can make yourself redundant.
Taking advice on how to prepare for sale well ahead of time – often 2 to 3 years may be required – and employing an experienced mentor or business advisor to develop a road map and to keep you on track can be invaluable.
Richard Murray, of Elephants Child, shares some advice around preparing for an exit.
"Performance, governance, compliance and risk are the key areas you need to understand and focus on with your business when it comes to a sale.
You need to understand how your company compares against your local and national rivals – benchmarking your productivity, profitability and growth is a worthwhile endeavour. This will give you an understanding as to where your business is currently and what your future goals could be to increase the value of your company.
We would also recommend including a neutral third party in the process as they can often be very useful in playing devil's advocate, and be able to see things from your potential buyer's perspective too, helping you come up with a realistic value for your business. Then, if the valuation isn't what you hope it would be, you can make the changes that are needed to get it to the valuation you want.
Finally, make sure you have a robust business growth plan (looking 3 years ahead) and an annual operating plan. This allows you to present a forward-looking business to your potential buyers."
This article originally appeared as part of the Ultimate Guide on www.Converge.today in August 2020. Other articles from the guide can be found via the links below:
