Make The Most Of Selling Your Company

Deciding to sell your business is a big deal, and while you might be a bit scared by the endeavor, there are more important reasons to get excited about it.

Before putting your company on the market, one of the best things you can do is to take specific steps to ensure you get the maximum value it is worth in a sale. Taking these steps will increase your valuation and boost buyer confidence so you have the upper hand in a sale.

Focus on Growth

Businesses with rising annual cash flow are the ones that investors and buyers want to purchase. Your firm will be valued higher the more successful and sound it is. Retained earnings (or the profit left over after expenses, taxes, and dividends are deducted) are a significant consideration, along with how they are used as working capital to reinvest in the company. It also indicates that, since operational efficiency will be a significant factor in valuation, you should concentrate on cutting costs and raising income. 

Look at the previous three years to determine whether cash flow is trending higher. If cash flow is not on an upward trajectory, you need to take action to get the business on the right course. When companies demonstrate that they can grow, they can command more money on the market. Future growth depends on your ability to move into new markets, keep up with new technology, and maintain a skilled team. Buyers are more likely to invest in a business that has solid goals and can show a plan for reaching them.

Get Your Books in Order

Beyond tax returns, to proceed with the due diligence portion of the sale process, you will need to provide any financial records and contracts about the business. Poor recordkeeping gives buyers the impression that there might be issues and that the company's financial performance might need to be more accurate. Buyers are more inclined to trust you if you are open and honest, as it shows that you take your business seriously. It is also essential in determining the company's valuation. You can only arrive at an accurate number if you have proper documentation of past financial performance and ongoing debts and obligations.

Refine Your Marketing Strategy

When it comes to selling a business, marketing should never be underestimated. Yes, you must successfully promote your products or services to customers. But at the same time, you must strategically market your business to possible buyers. 

Look at your marketing strategy to find creative ways to:

• Improve sales
• Enter new markets
• Gain a competitive advantage
• Build loyalty

If your customer base is more diverse, it will be more resilient in losing one major customer. For buyers, this level of insulation is a crucial quality when acquiring or investing in a company.

You will be better positioned to showcase your company's strengths to potential buyers if you show your marketing strategy for gaining and retaining customers. By working with an M&A firm with the marketing prowess to present your business in the best possible light and start a competitive bidding process, you will have the upper hand when negotiating a deal.

Build the Best Team—and Communicate With Them

A business's people represent much of its value, especially if it has few physical assets. A potential buyer will want to know that the current leadership team is trustworthy and capable of carrying on after you leave. Additionally, they will be more drawn to a company with a positive employer reputation. 

Beyond management, your core talent is just as crucial to your company's success. The last thing you want is for them to consider leaving because they are nervous about a potential sale amid swirling rumors and speculation. They should be confident that their futures are in capable hands. For this reason, a sale's details and confidentiality must be handled with extreme care. Workers should feel involved and informed about what is happening, but you should keep information regarding a possible merger or sale private until the appropriate moment. Remember that it takes time to sell a business, and many transactions never reach the finish line. You don't want employees to panic over something that will never transpire. But if you have confidence that you and your buyer will reach a deal, you need to communicate with your staff appropriately so they feel good about the situation and excited for the future.

Stay Involved

When trying to sell your business, it can be easy to become distracted by the process and the possibilities. But you must remember that you are still needed by your company and your employees, even if you plan to sell. The M&A process can be thrilling, but you must maintain your daily operations. It would help if you were still thinking about how to make improvements wherever possible to increase the overall value of your company and show that you are dedicated to its future success. 

Prospective buyers want to know you are still acting in the company's best interest. However, a business should not be dependent on just one individual. The business should be able to thrive even if something were to happen to you. This is also why having a great management team in place is so important.

Don't Go It Alone

You have put great effort into building your company, and its sale may be the most significant achievement of your life. To ensure that your business receives the most value possible, you deserve to have the transaction done right. In addition to providing that everything proceeds according to plan, seasoned M&A advisers possess specialized tactics and resources to secure the best outcome while upholding your objectives. Experienced buyers also know what to look for and how the M&A process works. In addition to protecting your rights and getting every last penny you deserve, working with an M&A team will show that you are a severe seller committed to the process.

Consult our Experts

Contact Benchmark International's M&A experts if you're considering selling your business to take advantage of our award-winning solutions and serious experience. There's a reason we are known in the industry as game changers.