December 5, 2019
“Always be ready to sell.” It’s a timeless business adage. Transactions require a mix of vision, timing, and most importantly, preparedness.
Consider this scenario:
In less than three years, your business has grown from a small consulting project to a services firm with hundreds of employees and Fortune 500 clients stretching across 30 states. Your limited partner, thrilled by the growth and profits, wants to sell his share. The market is peaking, and you realize there may never be a better time for a liquidity transaction. So you decide to join your partner and sell the entire business.
But a snap decision like this is only possible when a company has made the right preparations. I appreciate this better than most, because that was my company.
We had audited financials dating back to inception and extensive, organized operating documentation. As a result, our buyer closed quickly and leveraged that same information to hold a successful IPO shortly thereafter. For myself and my partner, the seamless transaction, coupled with our growth momentum, resulted in a significant exit.
This type of situation plays out constantly in businesses across America. Owners who get ahead of potential transactions, and lay the groundwork to sell well in advance, are often rewarded with timely exits and high valuations.
If you want to get ahead of the curve, here are nine things you can do to optimize the value of your business and prepare for an M&A or employee stock ownership plan (ESOP) transaction:
Ultimately, timing and momentum are essential. Maybe you have new products or services under development that are gaining traction in the marketplace. Or, your sales are rising and profits are increasing. Either way, the market can appreciate and value your company’s momentum. Businesses that are transaction-ready are best positioned to capitalize on momentum and secure a premium price.
Topics: ESOP Resources
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