1. Professionalize your books. Consider having audited financial statements prepared to give a buyer confidence in your bookkeeping. You may also benefit from hiring an interim CFO, find out more in our Do You Need a Chief Financial Officer? blog.
2. Stop using your company as an ATM. Many business owners run trips and other perks through their business, but if you are planning to sell, these treats will artificially depress your earnings, which will reduce the value of your company in the eyes of a buyer by much more than the value of the perks.
3. Protect your gross margin. Oftentimes, when leading up to being listed for sale, companies try to grow further by chasing low-margin business. You tell yourself you need top-line growth, but when an acquirer sees your growth has come at the expense of your gross margin, they will question your pricing authority and assume your journey to the bottom of the commoditization heap has begun.
4. Customer Contracts. If you are lucky enough to have formal contracts with your customers, make sure your customer contracts include a “survivor clause” stipulating that the obligations of the contract “survive” the change of ownership of your company. That way, your customers cannot use the sale of your company to wiggle out of their commitments to your business post-closing, which would impact a buyer’s valuation of your company. Have a lawyer draft the language to ensure it works in your jurisdiction.
5. Find your lease. If you rent space, you may be required to notify your landlord if you intend to sell your company. Read through the fine print and ensure you are not scrambling at the last minute to seek permission from your landlord to sell.
6. Get your Value Builder Score. Take 10 minutes to answer the Value Builder questionnaire now. You will see how you performed on the eight key drivers of company value and you can identify any gaps you need to fill before taking your business to market. The Value Builder System is a 12-module program designed to allow business owners like you to focus on the eight key drivers with the help of a WMC Advisor to create clear action toward improving the value of your business.
Selling a business can be an all-or-nothing affair. Contact Whitehorn today to find out how we can help you get ready for the sale of your business.
