Business Exit Strategy: Preparing Your Business for Sale

Dec. 3, 2010 - PRLog -- It will likely be the biggest financial deal you’ll ever make, so it’s vitally important to be sure you are properly prepared when selling your business, advises expert business broker, Michael Meyer, with the Benjamin Ross Group, a mergers and acquisitions firm. “Taking the proper steps to get your business ready for sale can significantly improve the likelihood of a successful sale.”

There is general agreement among professional business brokers that somewhere around one out of every five businesses in the country with annual sales below $10 million are for sale at any given time. Among businesses with annual sales below $3 million that are for sale, only one in five will sell. Businesses with annual sales between $3 and $10 million that are for sale, only one out of three will sell.

The principal reason the majority of small and mid-sized businesses that are for sale, do not sell is because they are not properly positioned to sell, said Meyer. “The owners of these businesses have failed in one—or more likely, a variety of ways—to make their businesses attractive to buyers and additionally have probably failed to take the steps that will enable them to get maximum value for their businesses if they ever should sell.”

For many business owners, the prospect of selling the business after years of pouring
every effort into growing the company can be emotional and difficult, said Meyer. That’s a major reason why it pays to structure a plan to prepare for the sale. “Remember, it’s crucial to use the same care and patience that is used to grow and sustain a business.”

What important steps are needed to prepare your company for sale?

• Determine the company’s actual worth. There are a lot of formulas for valuing a business. Buyers may base a purchase offer at least in part on the value of the assets in a business, the cash flow, gross revenues, annual growth and other factors. The sale price generally depends on profits and, in most cases, the sale price is some multiple of the businesses profit. Valuations can be obtained from a number of sources including a certified business intermediary.

• Be sure your records are up to date. You want all of your hard work to pay off in the sale, so be sure you have current, detailed records that provide an accurate assessment of the company’s financial history and current financial position.

• Remember your staff is an important asset. The loss of key employees during a sale can kill the deal. Key employees may be crucial to the ongoing success of the company. Assess which employees are prepared to stay with the company through the transition.

• Assemble a team of experts. No matter how independent you are, the sale of a business isn’t something to handle on your own. A professional business broker will take the load off your shoulders, negotiate and handle all the details, so you can spend time running the business when it’s needed most. Keep in mind that the sales performance of the company during the time it’s on the market is crucial, said Meyer, so working with a qualified business broker to sell your business will allow you to focus on the ongoing operation of the company. Business brokers know the ins and outs of Mergers & Acquisitions and take pride in what they do.

Always remember that selling a business is a one time event. Preparation is a key to a
successful sale, added Meyer. “Be sure you understand the process involved.”

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About Michael Meyer: Michael is a leader in the field of buying and selling businesses, and brings more than 25 years of business experience to the Benjamin Ross Group. Meyer is also a Certified Business Intermediary (CBI) – a highly regarded designation in the business brokers’ field which involves extensive education and testing, and trains brokers in the International Business Brokers Association code of ethics. He is available for interviews or as a resource on business-related news topics including selling a business or buying a business. Michael can be contacted at (215) 357-9694 and mmeyer@benjaminrossgroup.com.

About Benjamin Ross Group: With offices in Princeton, NJ, Southampton, PA, and Radnor, PA, the Benjamin Ross Group is the most experienced, professional and exclusive business sales, mergers and acquisitions/ business broker firm in the Mid-Atlantic Region. The company represents well-managed businesses, regardless of their size.