Preparing A Business For Sale
Once you have made the decision to sell a business, you have a number of things you’ll want to do to make your business more desirable for the new owner. You only have the opportunity to sell your business once, so you have that one chance to get it right. When you are planning the sale of your business, being well prepared can increase the end dollar value you receive.
In the ideal situation, your management style will have prepared your business for sale long before you sought to sell it. Even if this is not the case, you will want to ensure your business is represented well to show buyers clear reasons to choose your business over other investment opportunities. Organizing everything into a few binders will make it easier for your agent to communicate with the buyer’s agent and easy for the buyer himself of herself to see the advantages of owning your business. One of your binders should contain rules, policies, and procedures. This makes it easy for a buyer to step into the ownership role. While you may have prided yourself on running a successful business out of your head, buyers with less insider knowledge may fear that you are the reason your company is successful and be reluctant to buy for fear that they do not have the tools they need to be as successful as you were.
When providing your procedural binder, be sure to document those policies and procedures that are unwritten within your company. Coming into a strange culture with a large number of inexplicable rules can mystify any employee, and “that’s the way it’s done” is an unsatisfactory response. Having your company broken down by function is a great way to beef up your procedures manual and help potential buyers feel comfortable within their new leadership role. An explanation of each department, its function, and employee roles within the section is another way to bolster buyer confidence. Human resources can be one of the most frustrating parts of a job, so having a functioning blueprint of what to do and how to do it can be indispensable when taking leadership of a business.
If you have a large number of suppliers and customers, documenting agreements with these groups will be an excellent addition to your second binder. Focused on business relationships, this set of documents provides logistical support to prospective buyers while building confidence. Be sure to work with vendors and customers to maintain contracts in workable state for at least 90 days after the new owner comes in. Renegotiation can make or break a business, so you don’t want him or her afraid of a loss in sales or suppliers right off the bat.
