Every successful business will eventually change hands. So unless you’re planning for your business to fail, you should plan for a sale or generational transfer. That planning process shouldn’t be a spontaneous undertaking when you need to leave or have an offer. It’s something that has to begin way before a sale—ideally, it should be a part of your business plan.

The sooner you understand that your business will eventually change hands, the better prepared you are to begin building value. So what’s the difference between preparing for a sale and merely initiating one? Here’s what you need to know.

Preparing vs. Doing
Preparing for a sale is more than just the process of initiating a sale. Instead, preparation demands planning ahead with an eye toward increasing value. It means being prepared for someone to show up with an offer. If you’re not ready, you could lose a valuable opportunity.

Preparation also means being mindful of how your decisions may affect value over the long-term. Treating clients to golfing expeditions might be fun and even temporarily lucrative. But does it add long-term value? How will it look on the books? What if you had spent that money to buy an add-on company instead?

The Role of Market Forces
The current M&A market is booming, with more buyers and more cash pursuing low and middle market companies than ever before. Private equity groups are also major players, and individual investors are increasingly striking while they can. Interest rates are low, the economy is thriving, and banks are eager to lend.

This can’t last forever, of course. So while today might be a great time to sell, there are no guarantees for the future. Savvy owners prepare for whatever forces the future market has in store. Baby Boomers are increasingly retiring, and this trend will continue. We’ll begin seeing what experts are calling a Silver Tsunami. These businesses are flooding the market, and will eventually put downward pressure on valuations as more and more businesses become available. That’s all the more reason that preparation—and mindfulness of the market—can support a better sale.

Isn’t it Too Early?
What if your business is young and growing? You might think it’s too early so start planning. It bears repeating: if you succeed, you will eventually exit your business. If you gain a lot of success, that exit could come soon. So the time to prepare is always now. It is never too early to begin building your exit plan, because you never know who might show up with cash in exchange for your company.

You Need a Broker
A broker is your best ally when you’re planning a sale. You might be surprised to learn that it’s beneficial to develop a relationship with a broker even if you’re not planning to sell soon. An experienced broker can do a periodic valuation that provides actionable insights about how to grow your business and increase its value. Armed with this information, you can sharpen your plan for the future and do what it takes to build your business into a lucrative and appealing target for acquirers.

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 unconflicted advice on the sale of their business. Personal integrity and professionalism govern our performance.

Our unique marketing process and extensive research assures that our clients realize the maximum value from the sale of their business while maintaining confidentiality, throughout the process. Our seasoned and experienced Deal Closers adhere to the high standards and reputation they have worked many years to achieve.

We have successfully completed over 250 transactions in a broad range of industries, including manufacturing, business services, technology and distribution.