Key Elements for Every Partnership AgreementAugust 11, 2018
Maintaining Confidentiality Throughout the Sale ProcessSeptember 1, 2018
Successfully selling your business is all in the preparation. And preparation is all about seemingly small details. The more time you can take in advance, the more likely you are to shepherd your company to a successful sale. These 10 strategies can increase your chances of a truly successful exit:
- Make sure you really want to sell. If it’s boredom, age, finances, or something else driving a sale, this will be apparent to the buyer. Talk to a business broker, who may be able to help you figure out why you want to sell, assess whether it’s the right time, and support you to plan for a successful exit.
- Check out your business’s curb appeal—its literal curb appeal. Are there holes in the parking lot? Issues with the sign? Is the building clean and fresh? Buyers want to see a well-run business. Make sure the physical first impression you offer is positive.
- Clean up the interior. Just like when you sell a home, it’s time to update the interior. Are there well-maintained restrooms? Clean walls? An attractive building? Is the business disability accessible and up to code? If the answer to any of these questions is “no,” all the buyer will see when they walk through your doors is work they must do and money they must spend.
- Look at job descriptions. Does each employee have a job description? Are you filling a clear and specific role, rather than having your hand in everything? A new owner needs to know who does what, and they need to be able to competently take over for you. An owner who does a little bit of everything builds a business that can’t run as well with a new owner.
- Look at policies and procedures. What are your operational guidelines? How do you handle allegations of discrimination or disputes between employees? What about sick leave, holiday time, bonuses, and other employee benefits? If this information is not memorialized on paper, a buyer will not know what your staff expects. They may change policies in a way that harms staff and disrupts relationships. A buyer needs to be able to hit the ground running with clear policies that work well. Ensure they have this from day one.
- Stay on top of employee issues. Conduct regular performance evaluations. Put low performers on improvement plans. Know who is doing what, and how well they’re doing it. Owners want to know about your staff, about turnover, and about how best to manage your team. Be ready to give them this information.
- Get your documentation together. Due diligence is a serious undertaking, and dragging your feet can send up red flags. Be prepared to answer pointed questions about areas of exposure, such as customer concentration that’s too high or tax debt. Knowing about these issues now—which you will if you begin gathering paperwork—can help you manage them when a buyer discovers them.
- Know your tax history. Have you filed all of your returns, including monthly state sales tax and withholding, quarterly payroll and unemployment insurance, annual unemployment, and all of the other duties you must fulfill? You must be current on your returns. Otherwise your projections are based on faulty numbers.
- Are you ready for due diligence? The buyer is going to check every claim you make. So make sure you have the paperwork to support each and every claim.
- Address the legal issues. Is your company a valid legal entity, with annual filing of officers? Do you have a registered agent? Do you maintain corporate minutes and a functional board of directors? What about areas of legal exposure, such as outstanding debt or potential lawsuits? Now is the time to address each of these—not when a buyer discovers them and is contemplating walking away from the deal.
About Carpenter Hawke
Carpenter Hawke was founded in 1991 to provide expert M&A advisory services to sellers of privately owned businesses. Carpenter Hawke has successfully advised a wide range of clients looking for professional advice on the sale of their business. Personal integrity and professionalism govern our performance.
Our experience and knowledge of the appropriate steps enable Carpenter Hawke to provide strategy and plan formulation to suit the needs of each sell side client. New England based but we work, Locally and Globally!