Nelson Mullins' Rhys Wilson - "How To Prepare Your Business for Sale"
In December, 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 that he addressed them:
1st - Know your minimum sales price. Not second, not later, not based on what the market says. Do this first. In the article, Rhys explains the complexity of reaching a solid number. A thoughtful financial planner will identify things most of us would never think of.
For this blog post, I want to focus on conviction. Choosing a minimum sales price you believe in will anchor you during whatever decisions come next.
2nd - 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 (investment banker, business broker or 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.
3rd - 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, 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.
Posted on January 24, 2017
by Frank Williamson