|
 Over
95% of all U.S. companies, employing over half of our nation's workforce,
are family-owned businesses. However, very few of these businesses
survive into a third generation. Quite simply, there comes a time when
every business changes ownership.
When
an owner decides he is ready to sell the business, he will
be confronted with a number of difficult questions:
- Is
my business ready to be sold?
- How do I value and price the business?
- How do I find a qualified buyer?
- How do I offer the company for sale while guarding the release
of sensitive and confidential information?
- When and how do I tell employees about the sale?
- What is the best way to structure the transaction?
While
businesses vary greatly from one another, there are critical elements to all
business transfers that, with proper attention, not
only will
greatly increase the likelihood of a successful transaction being
completed, it will greatly increase the value of the business
before it is sold.
- Prepare an exit strategy: Though as
an owner you may be ready to sell, most businesses simply
are not ready to be marketed to buyers if you,
as owner, want to receive its true fair market value. At
Madison
 Cabe, we help you
prepare and execute this plan.
- Keep your eye on
the ball: Selling your business can become a significant
distraction. It is critical that as an owner, your focus remains
on the execution of the day-to-day operations; sales, cost-control and serving customers.
Engaging Madison
Cabe to market your
business allows you to do just that.
- Gather the facts before deciding on an asking price: At
Madison Cabe we strongly
urge clients to obtain a third-party appraisal of the value of their
business before we approach any potential buyers for these important
reasons:
- The
single greatest reason a business does not sell is that it is not
priced correctly. As an industry, this means less than 30% of listed
businesses sell, and those that do only get in the range of 70% of
the listing price.
- Buyers
do not accept on its face an owner's (or even an intermediary's)
opinion of value. A third-party appraisal significantly increases
the credibility and validity of an asking price. More importantly
it typically removes a critical component of the sale - the asking
price - from significant negotiations.
- Buyers often make snap judgments on the asking price of a business.
This results in qualified buyers passing over even fairly-priced
businesses. A third-party appraisal avoids this common phenomenon,
increasing the pool of qualified buyers for your business.
- Be flexible on terms: There is an old saying for buyers... "It's not what you pay but how you
pay it." Valuation experts point out that statistically, owners
demanding an all cash deal will receive a significant discount, perhaps
as great as 40%, on fair market value when compared with deals including
seller-financing as a component.
- Get your business and records in shape: It is absolutely critical that financial records be completely up-to-date,
and monthly financial statements be timely prepared while your business
is held for sale. Serious buyers will not look at a business if the financial
statements are four months old. Likewise, improving the physical appearance,
inventory and equipment are all important when inviting potential buyers
into your business. Put yourself in their shoes... would you be impressed?
- Be
willing to stay involved: Even
if you are ready to go fishing, keep in mind that it is likely
the buyer will need you during a reasonable transition
period. It is fairly common to expect a transition period from 90
days to up to one year. Your enthusiastic willingness to provide
this support demonstrates to prospective buyers that you are
serious about their success as well.
Call us today for a confidential, no obligation discussion on how
we can help you reach your goals!
|
|
