How much is your company worth? Well, maybe not as much as you think but don’t despair. You know that working long days and pouring your sweat into the business is what made your company a success. You surely take pride in knowing that your employees and their families have what they need – as a result of your vision. Being a small business owner, maximizing your personal wealth includes a successful exit strategy. Most companies sell for less than their true value because they have not taken the time to plan. Based on experience, business owners often make bad business decisions.
• Many important decisions are made with weak and incomplete information.
• Many important deals fail because the seller cannot provide complete or solid information.
• 30% of businesses have a weak balance sheet- too much debt! Why sell your company if there is no money left after the sale.
• Many transactions do not happen because the owner decides he/she is not ready to sell.
On average, it takes 24 months from decision to sell to completed transaction. If you delay thinking about terms until you are ready to sell your company, you may be disappointed in the process as well as the outcome. Potential buyers need quality information. Not only solid financial statements but as importantly, solid operational data. Sellers that provide quality information allow potential buyers to make quicker and easier decisions and usually bring higher values to the seller. It is important to consult with your most trusted business advisor on how to preserve the wealth that your hard work has plowed into your business.
How many times have you heard that certain clients are the most profitable accounts in your business and on closer analysis, you find that you are selling at a loss and are paying commissions on those sales? Same goes for product profitability- many surprises and not what you expected? Potential buyers are interested in well run businesses that can be leveraged or synergized. The most attractive companies are those that are easy to understand and analyze.