A 2015 survey by CNBC and the Financial Planning Association found that while 78 percent of small-business owners intend to sell their businesses to fund their retirements, fewer than 30 percent have a written succession plan.
To maximize the value of their business, owners must look ahead, with plenty of time to plan for a successful exit, and they must tell a compelling story to attract high quality buyers.
Begin by writing your company’s success story. Sit down and write a paragraph for each of the five areas below.
1. Good Growth Prospects
2. Unique Products or Services with Operational Strengths
3. Proven Trends & Profitability
4. Good Management Team and High Employee Retention
5. Repeat Customers w/ Low Concentration
Sell-Side Due Diligence
In addition to telling a compelling story, a key to getting the entire transaction to a successful conclusion is to perform due diligence on yourself before taking the company to market. The goal is to uncover anything that may be perceived as a negative surprise. Include the following items in your due diligence work.
1. Examine Your Financial Records and Controls
2. Review External and Internal Agreements
3. Document Policies and Processes
4. Mitigate Employee, Litigation or Environmental Issues
5. Comply with Applicable Government and Industry Regulations
If you are planning to sell your business within the next five years, begin the planning process now. It leads to a higher valuation, makes the process easier, and allows you to sell the company when you are ready.
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Note: this post originally appeared at www.PoeWolfPartners.com