Weekly Bulletin September 2011
Preparing a business for a sale should be done at least a year in advance. I can honestly say I’ve not seen a successful sale achieved in months. I have seen companies sold in shorter timescales and in all such cases the seller has been left regretting the outcome. In reality the longer you allow for the preparation process the better the outcome.
Getting ready involves implementing best practice initiatives that not only improve ongoing operations but prepare the company to respond to an enquiry from a potential buyer. There are seven critical first steps every owner should take:
1. Create a Strategic team
This should include both Directors alongside Experts who have been there before. Do not attempt to go it alone, professional guidance is essential from someone who has previously groomed a business for sale and been through the sale process.
2. Prepare a check list of important tasks
To be properly prepared there are a number of activities which need to be fully documented and available at your fingertips. Imagine a scenario, you’re in a meeting with a potential acquirer who asks for copies of all customer contracts and staff employment contracts. You need to be in a position to reach down to your documentation to support Acquirer Due Diligence and hand it over. These documents will cover legal, financial, commercial and marketing agreements and contracts.
3. Preparing the Marketing plan for sale
When you are selling anything be it your software, your services or your business you will need a comprehensive Marketing plan. Ensure that you have a clear and consistent proposition, a well thought out marketing campaign, and a good communication strategy.
4. Valuing your business
Any business valuation is subjective. The value of a business hinges upon how much profit a purchaser can make from it, balanced by the risks involved. In the end, the value of your business is only as much as a purchaser is prepared to offer.
5. Keeping your team informed
As a business owner and entrepreneur, you will be aware that the creation of a strategic plan, particularly one which is designed to achieve a trade sale, will start an internal change process. This plan, albeit with certain confidential objectives, will start to provide a very clear direction for the future. The change process will only produce positive results when managed effectively.
6. Announcing the Sale
The first joint activity you’ll undertake with the new owners will be to prepare an announcement to staff, customers and prospects of both companies. In the world of instant communication whatever is announced can quickly be read by friends, colleagues and competitors in seconds.
For this reason the message needs to be clear, concise and unambiguous. Too often one of these stakeholders is not fully considered in the desire to “big up” the deal and the consequences can take considerable time and resources to resolve. This inevitably detracts from the goal of achieving an effective integration.
7. “Beyond the deal”
Any potential acquirer who has a real interest in buying a company will pretty soon be thinking about the “implementation and integration phase”.
Acquirers, who think ahead, understand the broader scope and impacts, set out the right course for integration, and start the journey well, are more than likely to arrive on time, on budget, and where they expected, with reduced risk of unexpected or unmanageable problems along the way.”
If you are looking to prepare your business for a successful sale in the near future, and need the help of a software business expert and mentor, contact me on 01536 771440 for a free no-obligation consultation.
