The Importance Of Being “Sale Ready”

As a business owner, maybe you haven’t given much thought to selling your company. Or maybe you’ve bounced the idea around but not too seriously. It’s pretty common for business owners to think, “I have years before I plan on selling my business. Why would I worry about that now?” Well, here’s the thing. Life is unpredictable. Just look at how prepared the world was for the COVID-19 pandemic. We think it’s safe to say that no business owner was prepared for that.

But being prepared for the unexpected isn’t the only reason that it is important to have your business in “sale ready” shape at all times, even if you’re not ready to sell. If the company is not in ready condition, it could cost you financially. And it goes beyond that. Always operating your company as if you are ready to sell accomplishes several very beneficial objectives. It ensures that you are operating at peak performance with a focus on profitability at all times, and it helps you avoid being too late to the game to make the necessary changes to be ready to sell. A person’s priorities in life can change quickly or even gradually over a span of years, and you might not have the time to correct any issues that would impact the valuation of your company and, ultimately, its sale price. It’s important to remember that properly preparing a company to go to market can take years. When push comes to shove, if you end up in a situation where you need to sell, not being ready can be a costly mistake.   

Being sale ready doesn’t mean you want to sell. It simply means that you have taken the right steps to make your business attractive to prospective buyers. It’s never too early to be sale ready. It creates more options for you. It is a fact that the companies that are already prepared for the owner’s exit attract greater valuations. Whether it’s a planned sale or an unexpected exit, an owner needs to be able to detach his or herself from the business and have it continue to run smoothly. Essentially, preparing for your exit can:

• Boost the value of your company.
• Improve the ongoing return from your business.
• Mitigate risk for prospective buyers (which adds value).
• Enables you as a seller to concede fewer conditions in a deal.

Another upside to being ready to sell is that it can reveal issues that many business owners don’t even realize that they have, causing them to miss out on capturing significantly more revenue. This usually involves inefficiencies in technology, processes, and workflows. Systems can be out of date, there can be implemented workarounds that merely mask underlying issues, or maybe there are unnecessary costs or productivity problems, or staff is undertrained…among many things that will deter buyers. These matters can be remedied in a way that not only makes the business more attractive to buyers, but also more profitable for owners. So, whether you’re selling or not, being ready is simply a good thing.

Timing can also be a major factor. Conditions for M&A transactions can change at any time, and owners should be looking to sell when the market in their sector is strong. Therefore, by preemptively crafting your exit strategy, you can be ready to sell when the time is right, and avoid missing out on a great window of opportunity. It is yet another reason to always keep in mind just how expensive procrastination can be.

In getting your company sale ready, some initiatives you should focus on include:

• Improving inefficiencies
• Cutting unnecessary costs
• Identifying underutilized aspects of the business, such as technology
• Implementing quality leadership and talent across the board
• Finding opportunities to capitalize revenue and generate new income
• Stepping up marketing and branding efforts
• Making overall business improvements
• Considering tax implications of a sale
• Getting your financial documentation in order for due diligence processes
• Outsourcing anything that doesn’t create value
• Seeing where you can eliminate risk
• Thinking of ways you can be a more passive owner
• Looking at your company from the perspective of a buyer
• Resolving any debt or outstanding legal issues

Even if you are ready to sell at this time, it is a best practice to always run your business from the viewpoint of being sale ready. At the very least, it will help you generate solid short- to medium-term financial returns with an excellent capital gain on the sale. It can also benefit the bottom line in the long term.  

Maybe you’ve thought about getting sale ready, but you just aren’t sure where to start. We get it. At Benchmark International, we can help. Please reach out to us to discuss your options regarding the sale of your company, or even how our experts can help you get your business in sale-ready shape. We look forward to hearing from you.

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