The real question a business owner should be asking themselves is
“how do I maximise the value of my business so that I release the most NET cash to me when I sell”.
The sale of a business is all about the story (I call it a fairytale in most instances) created by the seller. The potential purchaser receives the story (information memorandum or sale document) and will (or should) check that story is based on solid, supportable facts.
Here’s the keys to a successful value build
- Know your end customer (buyer) and what their wants and needs are;
- Craft the story tailored for the end customer so that you get their emotional interest;
- Prepare numbers that support the story (they are the language and what really count);
- Support the numbers with documentation of contracts, systems etc – a good due diligence will check these.
And remember taxation, it can kill the cash realizations so make sure you have a great (appropriate) M&A tax adviser on Board.
Maximising the value is a daily process and every business person should start creating their story NOW!
The story should take into account
- Market trends
- Industry trends
- Historic trends
- The potential buyers emotional reason to buy now! (yep you are anticipating the future buyers needs right now)
- Stage of life of the owner
Start preparing NOW, TODAY! and remember in selling the business (its the age old investing adage) – the trend is your friend!