Recently, I did a presentation with Jim Afinowich of IBG/Fox & Fin where the topic was ‘How to prepare your business to go to market’. Jim is a M&A transaction advisor here in the Valley and he gave advice that three things must be in alignment, or ready, before you sell, and I agree with him. Here are three tips to help you align business sales for best results.
What is the current state of interest rates, economic growth, industry growth, and money supply in? For example, are interest rates in a cycle of accommodation, restriction or neutral? Is the economy or the industry in a state of expansion or contraction? Each element, in its own way, plays a key role in determining if the market is ready to accept the sale of your business.
Are the financial and legal records of the company in good order? Are the financial statements based on GAAP? Is there evidence that supports the accounting entries? Have all the legal documents of the company been compiled and are ready to be examined? Examples of legal documents include real property leases, customer contracts, insurance contracts, etc. Are all the reports management uses to make decisions preserved and ready to be examined?
Lastly, is the owner ready to sell their life’s work? Is the owner ready to answer difficult questions posed by the buyer and produce iteration after iteration of reports and documents required in the sales process? Sometimes, the current owner will stop the sales process because they are so frustrated that they would rather keep running the company rather than go through the sales process.
So remember, before going to market with your company, make sure each of the three items above are in alignment to ensure the best possible price for your company.
For more information on this topic, or to learn how Baker Tilly specialists can help, contact our team.