We see many owners who are contemplating a sale. Many are ready, but many more are unprepared and can’t understand why they either fail to get a bite or when they do the valuation is a disappointment.
7 things to get right before you start.
Here is a quick checklist of the typical attributes that buyers seek from an acquisition. How many can you tick off?
- A shockingly clear, simple and compelling vision, strategy and business model – It should demonstrate a deep understanding of your market dynamics, the changing needs of your clients or customers and how you will retain your profitability in an increasingly competitive environment.
- A demonstrable and consistent track record – to both achieve a valuation that meets your expectations and provides a risk/return profile attractive to a buyer.
- A stable and appropriately broad leadership team – with depth to cover future succession across the leadership team.
- Appropriate scale – covering internal resources, external clients and margins to withstand shocks to the business and to avoid reliance on key clients and key staff.
- The potential for growth in a growing market – this means that growth is not predicated only on winning market share from the competition.
- Culture and values-set relevant to your business model – this is evidenced by behaviours and results, such as strong staff engagement and low staff turnover.
- Governance structures and processes – it should be demonstratively fit for purpose, efficient and effective.
Don’t leave it too late
Lastly, don’t leave it too late to be sale ready. Ordinarily, it takes years to build a business that will generate the sort of exit value vendors crave. All too often vendors leave it too late to address issues such as leadership succession or spread (which requires an investment of time and money, delegation and empowerment) or invest in appropriate systems. If you are missing some of the above attributes, budget on at least a couple of financial years to get your house in order. This will allow you to create a seller’s market for your business to drive up its attractiveness to a buyer.
The purpose of this checklist is to help you prepare your business for a sale. If you are still unsure and need strategic advice, feel free to send me an email.
