Page 1

Richard D. Mowrey’s

BUSINESS OWNER’S JOURNAL Creating Wealth Through the Power of Your Business

When is the Right Time to Sell MY Business? As a professional intermediary, I am often asked: "When should I sell my business?" Although every business and every situation is different, I always give the business owner the same answer.

The best time to sell YOUR business is: When the business is ready and When you are ready and When the market is ready!

As we all know, both the public and private markets have been very volatile for the last three

years. In this environment the underlying elements are the key to understanding what is occurring. Financing constrictions, which changed the equation on the average cost of capital, have increased but may be ready to abate. The number of active strategic buyers, which had been reduced because of underlying businessconditions, is slowly increasing. These facts made it difficult to get optimal results in the last two years. Since the market place does not yet appear to be changing, any business owner who is now personally ready to sell should focus on the things that can be done to affect a successful business sale when the market improves.

Copyright (c) 2009 by: Management Services & Development, Ltd.

Business Owner’s Journal

Creating Value Through the Power of Your Business

First, be sure you, the owner, are really, really ready to sell. Second, prepare the business for sale as if you were going to sell it in this difficult environment. (Many, many businesses change ownership due to unplanned events or to the development of an unexpected, very unique opportunity.)

As a business owner, you can start with the following simple check list: 1. Improve Performance: Don’t wait to make any hard decisions. (New buyers do not really want to take control and face a round of cuts.) Fix problems, drop poor performing product lines, adjust overhead expenses, develop the best growth patterns in revenue and cash flow that are possible. 2. Act Quickly: Once you are ready to sell, act! Do not wait. Bad things happen when you wait... losing employees, or key customers, etc. The sales process is complex and time consuming. You do not want to squander management time during this critical period. 3. Plan and Execute an Extensive Buyer Search: There are a variety of active buyers in the current or really in any market. Private Equity Groups have the funds to invest in the right opportunity. Many individual managers from top companies, who may have been furloughed due to the economy, are actively looking also. Plus international companies, as a result of a number of factors, are increasingly active in the United States. Create a marketing plan that confidentially exposes the business to the maximum number of qualified buyers in a short time. In this uniquely difficult financing environment, you will want to focus on buyers who both know the need for a large (40-50%) equity component in the transaction and who have the financial strenght to complete such a transaction. (Many of these buyers can and will act quickly if you have a business that matches their investment criteria and have sufficient flexibility to address current market anamolies.)

Page 2

Business Owner’s Journal

Creating Value Through the Power of Your Business

4. Document Processes and Systems: Part of what makes a business function effectively and efficiently are the operating processes and formal and informal systems in daily use. Be sure to recognize the value that these systems deliver to your business and to any future buyer. (Where necessary move immediately to improve any substandard system.) 5. Keep Your Key Employees Happy: Careful communication and good planning will help keep all of the key people in place. (There may be significant opportunities for each of them with a new owner.) Every owner needs the management team’s help to complete a transaction. You need the team to operate the business effectively and to assist you in the sale process. Although everyone is theoretically replaceable, during or immediately after a sale is not the time. 6. Retain an Experienced M & A Specialist: The sale of a business is complex and time consuming. You, the business owner, need to run the business and improve performance during the sales process, which may take up to a year. Get help from an experienced professional who has access to the right parties, knows the market, and can guide you carefully along the way.

The right advisory team can effectively complete a sale even in a uniquely difficult deal envi-

ronment. Start today to build your team and to plan for your exit from your business. This focus will permit you to prepare and time the sale of your business. Always, remember it is your business and your decision. You can Increase Your Wealth through the POWER of Your Business.

Page 3

Business Owner’s Journal

Creating Value Through the Power of Your Business

The professionals at Management Services & Development, Ltd. have the critical experience and the international support system to guide you through the sale process that is outlined below:

Phase I Development of a Confidential Seller’s Profile Development of the Business Information Document Distribution of a Confidential Seller’s Profile Buyer’s completion of Confidentiality Agreement Distribution of the Business Information Document Establish buyer’s ability to purchase business

Phase II Facilities inspection by buyer(s) Preliminary price negotiations Deal structuring (Agreement in Principle) Development of the Definitive Purchase Agreement

Phase III Due diligence Closing

[There are over a hundred detailed steps in this sale process. Every Single Sequential Step should be executed carefully to achieve the optimal result!] Additional information and resources to help you save time and avoid costly mistakes can be found at:

Page 4

When is the Right Time to Sell My Business?  

An experienced, professional intermediary provides business owners information on when to sell plus preparation steps to enhance value!

Read more
Read more
Similar to
Popular now
Just for you