14 Sep Will Your Business Transition Planning Support Your Timing To Sell?
One of the things I tell my clients is “your business should always be ready to sell”. Most look at me and say, but I’m not ready to sell today. I say exactly! The time to get your business ready to sell is long before you’re ready.
Business transition planning, and strategy in general doesn’t usually get a lot of executive time in many companies. We are too busy working on the day-to-day and feel that we will always have plenty of time to think about the future. The truth is you should start thinking about selling your business a minimum of 5 years before you want to move forward. If you want to get the highest multiple for your hard work, you have to plan ahead.
I’ve been involved in numerous acquisitions and mergers from my own companies to client companies. There are many things that come up during due diligence that adversely affect a company’s valuation. I’ve seen many of these in client organizations. Items like:
- High concentration of revenue in one or two accounts
- Lack of documented systems and processes
- Lack of management depth (This is especially common when the founder is running the business; the success of the business depends on him or her remaining with the organization.)
- Lack of a compelling value proposition (a differentiator)
- A historical rollercoaster of sales and profits
- Lack of, or obsolete, infrastructure
- Product or service no longer meets market requirements
These items must be objectively identified, documented, and corrected.
I recently published a book, Conscious Business Development, that discusses an on-going process to build sustainable value into your business. I wrote it because in dealing with business owners and CEOs of small and mid-tier companies over the past 16 years I’ve seen the same issues over and over.
Planning and execution creates value.