The most successful transitions are those where the business owner was ready. Consider taking the following actions to move your business closer to being adequately prepared for going to market.Ensure accurate financial reporting
The company’s financial statements should offer confidence to a buyer and may require the company to consider upgrading the financial statements several years in advance of a sale. Audited financial statements will offer the highest level of confidence to a potential buyer.
Evaluate your management team
If your business can not function effectively without the owner involved in the day-to-day operations, it's time to train or hire personnel on critical responsibilities to reduce dependence on the owner. If your company already has a solid management team in place, ensure they are competitively compensated.
Obtain business valuation estimates
It’s important to understand the value of the company and having this information early on provides an opportunity to make changes that can increase its value. A quality of earnings (QoE) report can be a great tool in preparing to sell a business and is often something that comes up during the due diligence process
Engage a tax professional
The sales tax rules have become increasingly important to potential buyers. A nexus study dissects the business activities and determines if those activities create sales tax nexus within states. The purchase price could be significantly impacted if the company has unaddressed state tax issues.
Having an owner and company prepared for an exit transaction takes intentional and consistent efforts. Since improvements take time to implement, owners contemplating a sale should start preparing years in advance to maximize the value obtainable in a transaction. Those owners who are adequately prepared often achieve the highest value and a successful exit.