Nelson Mullins lawyer Rhys Wilson wrote a very good article for Industry Today about how to prepare a business for sale. I liked both the content of his points and the order in which he addressed them:
1. Know your minimum sales price.
If you’re considering a business sale, do this first — not second, not later, not based on what the market says. In his article, Rhys explains the complexity of reaching a solid number. A thoughtful financial planner will identify things most of us would never think of. Choosing a minimum sales price that you believe in will anchor you during whatever decisions come next.
2. Know the value of your business.
Rhys makes the point that this doesn’t have to be a formal valuation. Second, not first, get an estimate from a M&A advisor (an investment banker, a business broker or a consultant like Oaklyn Consulting) about where companies like yours might trade, so that you can compare your minimum sales price with a possible sales price and start to quantify your “deal” and “no deal” options.
3. Reduce risk = Increase value.
In other words, start to change the value of the business by fixing the things that keep a business from being a market-ready asset. Most private businesses are not managed to be sold on any given day, and making a business market-ready takes time. Rhys’s article includes some important headlines, and introductory conversations with thoughtful lawyers, accountants and M&A advisors can add helpful insight.
My recommendation: Work through these steps with advisors who have your best interests in mind, will not push you into a deal, and will help you identify and quantify all your options.
Read the original article linked here.