Here’s what’s new from Prometis Partners:
Our topic for the month of March 2019 has been determining if your company is ready for sale. This is the burning question all business owners want to know the answer to.
Is Your Business Ready for Sale?
The question is straightforward. Unfortunately, we can’t give as direct an answer. Again, there are many factors to consider. If, as an owner, you do not fully prepare for the eventual sale of your company, you will find that selling your business is a more difficult and chaotic process than you expected. It may come with unforeseen complications for you, your family, and your employees. It may mean your company will not sell at all. Often it’s simpler to tell when a company is not ready for sale. Here are signs that more work needs to be done:
The company is owner dependent. If the company cannot survive without the owner being present and active in its day-to-day running, it’s not ready for sale.
The company has weak or undeveloped structures and procedures in place. In very owner dependent businesses, there are no policies or procedures for how the business should be run – they’re all in the owner’s head. But there’s a spectrum between that and a system that is rich in structural capital. The goal is to have all the company’s policies and procedures written down in detail, have the company’s employees fully trained in how to follow them and how to train others to follow them as well. Click here to read more.
Exit Coach Radio Podcast
In this podcast, Vince and Max Friar of Calder Capital talk about how small to medium-sized manufacturing, service, and distribution businesses make up the fabric of America. The owners of these companies employ the majority of America’s workforce, and they pay most of the taxes. They know how they began their companies and how they built them up, but they don’t know how they will exit them. And they don’t realize how long it will take from their decision to sell until the moment they will truly be able to walk away from their company and move on to the next phase in their lives.
Click here to learn what that time frame is, what makes a business salable, and why companies should emulate the franchise model if they are preparing to sell.
How Will Selling Your Business Affect You?
Your business might be ready for sale, but are you ready to sell it? This is something many owners do not explore until they are nearing close. What is the next step exactly? Is it retirement? Will it be starting or purchasing another business? If you are planning on retirement, how will you adjust? Many business owners are used to working long hours and putting out fires. It can be jarring to go from that to a life of relaxation. Do you want to keep working after the sale?
Another issue that affects business owners is money. Have you calculated how much money you will need to retire? If your business’s current valuation is not high enough for you to retire on the proceeds of the sale, this is another red flag indicating your business is not ready to be sold. You will need to decide on strategies to increase your company’s value and put them in place over time to make that happen.
Prometis Partners would be happy to talk to you about any transitional planning you have in mind for your business. While it’s always best to start early in reducing owner dependence, we can help your come up with strategies for both the short term and the longer term now.