There are things that we often only do once in our lifetime, and perhaps wanting to sell your company is one of them, so when an entrepreneur considers selling their company, they have a lot of doubts. Even as many as when they founded it. At ONEtoONE, after more than 18 years advising on the sale and purchase of companies, and with thousands of sales orders, we have compiled the 5 most common questions that our clients have asked us when selling their company.

We all want to minimise mistakes when making important decisions in our lives. How much will it cost me to sell my company? Is this the right time? Who can I rely on to help me earn as much as possible? And, above all, is it the right time to sell? Yes, now more than ever, it is. We clear up your doubts so that you don’t miss this opportunity.

1. How much is my company worth?

Short answer: whatever a buyer wants to pay. Long answer: it depends on how you balance the concepts of value and price and which buyers you can reach.

Strictly speaking, the price of a company is the amount for which two independent parties agree to carry out a purchase and sale transaction, and this amount is fixed during the negotiation process. This happens after an analysis of the company’s figures and the market. To do this, you need to know how to access this information and weigh it up.

To get the best price possible, you need to know what the value of the company is, which is a subtle concept.

In order to clarify the balance between the value of your company and the price you can obtain, a professional valuation is an essential first step.

The right buyer will understand what your company is worth and will pay what it deserves. In general, foreign companies trying to enter new geographic markets are willing to pay more. However, contacting such buyers can only be achieved with an international network.

A professional advisor will know which of the various valuation methods is right for your business. He also will be able to get the highest possible price for its value.

Read more about: How to get the best price for my company.

2. When is the right time to sell my company?

The time you choose to sell will make a huge difference to the price you can get. Is it the right time to sell my business?

Matching personal, business and economic factors at the right time is the key to knowing when to make the best decision. The time you choose will also influence the time it takes to successfully complete the sale.

You need to know how to spot a window of opportunity. At the moment, there is still a lot of liquidity. Large financial and international groups are looking for growth through acquisitions.

But keep in mind that windows of opportunity also close. It may be a long time before another one opens. All indicators seem to point to a future recession. Those who do not sell now may not be able to sell at current prices for years to come.

If you believe that your personal motives and your company’s current momentum are aligned to maximise the value of your company, the time is now.

Read more about: When is the best time to sell my company?

3. How do I sell my company?

You are undoubtedly a specialist in your business and your industry, but entrepreneurs usually only sell their businesses once in a lifetime. If you know how to manage your business, an advisor knows how to sell it in the best way.

Buying and selling a business is a science in itself. You have to know the timing, the process, the prices, the state of the market and mastering negotiation. Also, you need to know how to handle the paperwork and documentation. In addition, you have to know how to find the buyer who can pay the most.

You are probably not familiar with the stages of a sales transaction or the most common concepts. Once you have decided to sell your company, a process begins that will be led by your advisor, who will guide you through the initial phase of documentation and valuation of your company, the search for the ideal buyer, the due diligence process and finally the negotiation of the sale and purchase agreement.

Several concepts are decisive for the success of the operation. Some of them are the confidentiality of the entire process and the exclusivity of the advisor, who will guarantee confidentiality.

Your job during the sale, which may take a long time, is to focus on your company in order to strengthen its value. Maintaining its profitability will determine the price and the closing of the transaction.

Read more about: How to sell a company 

4. How much does it cost me to sell my company?

This is one of the first questions entrepreneurs who think of selling their company ask themselves. It does not have a simple answer as it “depends” on many factors, among others, on the advisors that come into play.

It should be clear to you that for a once-in-a-lifetime transaction in which you have no experience, it is more advantageous to rely on professionals. Having at least one M&A advisor, a lawyer, and a tax advisor are the professionals we recommend.

As for the first one, advisors in the sale and purchase of companies usually work with a fixed fee and a success fee. This advisor is of vital importance because he will ‘create’ the operation. Their fees are usually a percentage that will depend on the size of the transaction; the higher the transaction value, the higher the fees, so the alignment with the client’s interests is maximum. Success rates can range from 1% for large transactions to 6% for small transactions.

As for lawyers and tax advisors, they usually enter the transaction when there is already a first agreement between buyer and seller. Their fees are usually fixed for the amount of time they will need to spend to underpin the transaction. Again, depending on the complexity of the transaction, their fees can vary in a very wide range, nowadays, between 25,000 and 100,000 euros.

If you have ever heard the saying “being cheap can be an expensive mistake”, you will find no better application for it than in the case of the sale of a company. You may save some money if you don’t hire these professionals, but the benefits you get from their services will more than cover this expense.

Read more about: How much does it cost to sell my company?

5. Who can I trust to sell my company?

You have dedicated your whole life to your company. You have built up your wealth with it. When it comes to selling it, you are not going to put it in the hands of someone who does not understand its importance and what it means to manage your wealth.

You wouldn’t go to a family doctor if you needed a cardiologist, even if the cardiologist charged more or lived further away. Just as you would not put your health in the hands of a non-specialist doctor, you would not put your wealth in the hands of someone who does not know how to move it without making a loss.

Selling a company is a technical and financial job with a lot of research and strategy behind it. When dealing with such matters, we need to be able to trust the person in front of us. Make sure you trust for the right reasons. Sure, you can trust the family lawyer or a lifelong friend, but not place on them the enormous responsibility of carrying out a complex transaction that they have never done before.

It is worth spending some time looking for and finding someone you can trust to sell for the right reasons. And in this type of transaction, ask yourself, what arguments justify your trust? You can certainly rely on an advisor who:

• Has proven and successful experience in selling a business.
• Understands your family, financial and personal.
• Has your best interests at heart.
• Has access to buyers who can pay more and better.
• It is legally and contractually bound to handle the transaction with confidentiality.
• Treats you humanely and honestly.

The reality is simple: to sell your business, you need the help of a professional who specialises in business sales.

The value provided by specialist business sale and purchase advisors will be reflected in the price you get. To do this, they will help you get your business properly prepared, locate the highest paying buyer wherever they may be and help you manage the paperwork in the right way, as well as preventing any mistakes you might make.

Read more about: The role of the advisor in the sale of a business

About ONEtoONE

ONEtoONE Corporate Finance is a global advisory firm specialising in the sale and purchase of companies in all sectors. Our successful experience with more than 1,700 mandates supports us in advising on any issue related to the details of transaction closings.

If you are interested in considering the sale of your business and need professional advice, please do not hesitate to contact us. The window of opportunity is open – we’ll help you get through it!

When the time comes to sell your business there are many things that you will need to consider and prepare in advance. One of the factors that is often overlooked is the importance of your employee working conditions. Why are your employees working conditions important when preparing your business for sale? Keep reading to find out.

Focus on your workforce:

Presenting a well organised and dynamic workforce to potential investors or buyers is essential when trying to close a sale. It is crucial that you have all your employees regulated, i.e., pay overtime, per diems, etc. Analyse the possible employment of freelancers or the status of partners who provide services in the company. Buyers look for well-organised companies and do not want problems to arise because of any labour irregularities. All possible sources of problems detract from the attractiveness of your company and therefore can lead to complexity in the payment of the price, in the form of contingent payments, escrow accounts or lowering the price.

Find out why you should prepare your business for sale as early as possible here

Have you become the “orchestra man”?

“The orchestra man” in a company means that everything depends on you and all desicions come from you.  Instead, you should professionalise your company by having a structure that allows you to distribute responsibilities so that in turn, everything does not depend on you. If you don’t already have one, hire a general manager to manage the company and report to you as president or CEO. This will allow you to make a much smoother transition when the buyer, a financial investor or an industrialist enters the company. When the buyer observes a very hands-on company management, the deal often falls through, especially with international buyers.

If you would like to find out more ways to prepare your business for sale, click here

The labour aspect in a service company is especially relevant for the sale of the company. As long as everything is in accordance with the current regulations, you will avoid possible contingencies in the sale process. Remember that the objective of preparing your company for sale is to eliminate obstacles that may hinder the process. Furthermore, it would help if you created a management team with attractive incentives for the fulfilment of objectives and with personal development plans to keep them loyal to the company. It is also advisable to involve key executives in the sale because you will need them to offer the best face to the investor and ensure that the company is in the best hands.

How can you prevent executives from leaving during the negotiation phase?

When preparing your company for a sale, it is encouraged to prevent executives from leaving during the negotiation phases of the sale, as this could be devastating to the buyer’s perceived value. One measure we have implemented on occasion with the entrepreneur has been to inform key executives of the sale idea and reward them with a percentage of the transaction value, encouraging them to collaborate to improve financial ratios during this period.

To sum up, it is clear that when the time comes to present your business to potential buyers or investors, having an organized workforce is an essential component to the success of the sale

The recent pandemic that we have been through has caused a significant change in business models. Specifically, it has accelerated digitization in all types of companies and their processes.

Technology advances faster than we think, and it is essential for companies to identify in which direction they should go. For this reason, it is crucial that, no matter how successful your company is, you have a vision and the right strategies to develop your company’s full potential and take it to the next level in this new landscape.

Digital transformation and technological trends can multiply your company’s benefits and increase its value for potential investors. So, how can digitization help with the sale of your company?

6 Main benefits of the digital transformation of your company for its sale

1. It allows better optimization of your process

The most precious resource for any company is time. Wasting it leads to delivery delays, lost customers, and planning disruption. Digitization can optimize these processes. Using the right tools for your company, you will avoid these unforeseen events.

Doing a good study of the type of technology you need to optimize your processes is always recommended.

Your work team will increase its productivity and, therefore, the profits of the company will increase.

2. Automation of your processes

In all companies, there are necessary but repetitive processes.

Currently, thanks to developers and technological tools, we can use systems that perform these tasks simply by programming them.

An automated process implies increased productivity, higher work standards reflected in the quality, easy fault detection, faster correction, and reduced possible human errors.

3. Incentive work team

Often, a work team is not as productive as expected because it does not have the necessary tools or does not know they exist.

Once these resources are available, it will be beneficial for the company and open a window of opportunity for the team. Employees will be able to add more value to the company.

4. Greater adaptation to market changes

Digitization contributes a lot to the efficiency of your company’s production processes, making the response to customers much faster.

Entrepreneurs often think about the difficulties of carrying out technological innovations: resistance to change, the need for staff training, the time required to adapt processes to new changes, etc. What they fail to see is the excellent long-term benefit from the investment of that time and effort.

The adaptation of the means of production, distribution, and customer service is a necessity imposed by the market and an opportunity to increase the profits and value of the company. For both the entrepreneur and the company, the integrated technological elements for process optimization will increase the company’s value, whether it is to take the company to the next level or sell it

You might be interested in reading: Maximize the price of a company

5. Create new business opportunities

The renewal of your company at a productive level allows new business opportunities to arise. You will be more competitive in the market, and you will have a broader range of possibilities when investors are interested in buying your company.

6. Cost savings

Achieving the most significant benefit with the least possible expense is one of any company’s main objectives, and the use of technologies helps to enhance this objective.

The use of data stored in the network and the automation of processes of all kinds are examples of reducing business costs.

There are significant benefits to be obtained from the digital transformation of a company. If the objectives are the sale or the search for investment, you must consider that every investor performs Due Diligence. It is a necessary audit of the company’s financial, legal, commercial, labour, environmental, and business aspects to be purchased.

Therefore, a digitized company with organized processes and good productivity and efficiency makes the buying and selling process phases easier and more fluid.

Digitization can often be complex; however, the benefits it provides to your business must be taken into consideration, as it will make it a more reliable and attractive company.

Preparing your company for the sale is a fundamental factor to consider. Digitization will mean that your company’s life cycle will be longer, and your brand will be more established.

If you are considering the sale of your company and you need professional advice, do not hesitate and contact us without any commitment:

Selling a company is a huge step for any entrepreneur that requires thought, preparation, and time. Having an expert M&A advisor is essential as it plays a significant role in the amount of value created in the deal. Therefore ensuring you have picked the right one for your company is critical as many M&A advisors are not effective.

In this article, we explore the 4 key elements you should keep in mind when finding the right M&A advisor for you.

1. Understands your business

Your M&A advisor must have a factual understanding of present and future industry trends, enabling technology, and interdependent industries to raise the value ceiling significantly. With this, they can design an optimal collection of investment candidates when selling your company

2. Finds the best investors when selling a company

A great investment advisor will identify the investors and firms who are most interested in a client’s offering. The advisor will swiftly find the most advantageous matches for each customer using analytical approaches to create a well-defined target profile.

3. Leverages global reach and local insight

An experienced advisor should leverage a vast international investor network that conjoins numerous industries. Your advisor should then leverage access to other valued M&A colleagues with a thorough understanding of financial markets, industries, and companies in each region globally.  This enables them to open conversations with new investors and corporate networks who ensure a significant interest in the deal.

4. Sees business in a personal light

A skilled investment advisor is fully aware that M&A success is reliant on people’s willingness to embrace and support you before and after the transaction. It is essential to find an advisor who understands how important your company is to you. This way you can ensure the best possible outcome for you and your business.

You might be interested in: Why give exclusivity to an advisor in the sale of my company?

As you can see there are many things to keep in mind when selecting the right M&A advisor for the sale of your company. At ONEtoONE we can help make the decision a little easier with our team of expert advisors who will guide you through the process every step of the way using a tailored service to create competitive interest and maximize value.

Selling a company is one of the biggest decisions in the life of any entrepreneur. But to get the best result and, above all, the best price for the sale, there are a number of do’s you must address and don’ts you must avoid.

Read on to find out the 6 do’s and don’ts when selling a company!

3 don’ts when selling a company:

1. Don´t forget to carry out a reliable valuation of your company

Failure to carry out a reliable valuation of your company  means that you won’t know how much your company is actually worth. Subsequentially, you will not be able to reasonably argue a price to your potential buyers. You could be asking for a price that is above your means, or you could be oblivious to the fact that your company’s true worth is greater than what you are asking for.

2. Don’t proceed with the sale of your company without a professional strategy

A smart seller must consider why they want to sell their business and how to clearly face the selling process. If you’re not clear on this, it can be detrimental when it comes to selling your company because the buyer might notice odd things about your attitude and become concerned. They can mistake your insecurity for insincerity, leading the buyer to question you and your company. This raises their risk perception and, as a result, lowers the value they see in your company.

Having a professional strategy is crucial to a successful sale although it is difficult to do this on your own. Professional advisors can help you every step of the way to ensure you get the most out of the sale.

3. Don´t negotiate with a single buyer

When a single buyer realizes that you are negotiating solely with them, they may take advantage of the situation. They’ll begin to play with time, extending deadlines and demanding for more and more concessions. As a result, it’s critical not to make the mistake of selling your business to the first company or investor who approaches you. This decision should not be made without a comprehensive study and analysis of all possible offers and prospects.

A professional advisor would know the best way to find the best potential buyers and would help you in this kind of negotiation.

 3 do´s when selling a company:

1. Do be prepared to take your company off the market and professionalise the selling process

During a company’s sale process, you may learn that there are no potential buyers or that there are buyers who are willing to pay less than your minimal price. In this circumstance, you must be prepared to take your company off the market and continue operating it, creating value for one or two more years before trying to sell it .

“A professional advisor can focus on the selling process while you put your full focus on your company, so it doesn’t lose value during the time of the operation. This is the best way to ensure you don’t miss out on the best deal for something you’ve been working on your whole life.”

2. Do keep the interests of the minority shareholders in mind

First, agree on the sale with them and include them in the process from the beginning. A good agreement between the co-owners needs and expectative will ensure the more successful result possible in the selling process.

3. Do face the company’s intrinsic obstacles

Once personal obstacles are clarified you should face the company´s obstacles. With professional advisory you will know how to face the unavoidable steps in the selling process. Regularizing contingencies, hiring prestigious auditors, clarifying the company structure, avoiding long-term obligations, establishing a competent and cohesive workforce, and defining and documenting business procedures will be used to overcome these challenges.

If you want to know what mistakes to avoid during a company’s selling process, click and read our article:  10 mistakes when selling your company – ONEtoONE Corporate Finance

If you are thinking of selling your company and want to ensure you follow the do’s and don’ts and make the most of the sales process, do not hesitate to contact us without any commitment: 

Do you know how to prepare your business for sale?

Imagine that one of your friends tells you he will run a marathon tomorrow, but he hasn’t trained a single day. What would you say to him?

It is likely that phrases like “you’re crazy, it’s dangerous for your health” or “without doing any preparation, it’s reckless” would come out of your mouth. You would be right. Preparation in racing is essential.

It is the same in many other facets of life, such as preparing your business for sale.

11 key points to preparing your company for sale

1. When preparing your business for sale, the more attractive you make your company to the buyer, the more you can ask for and the more you will get for it

As advisors in mergers and acquisitions of companies, we usually indicate that preparation is behind 90% of the success of a company sale. When an entrepreneur decides to sell a business, we often find companies are not prepared for an optimal sale, so it would be advisable to spend time to resolve any ‘weaknesses’ that we find before the sale because these factors will certainly reduce its value and/or hinder the sale process. Logically, this takes time, and unfortunately, on too many occasions, the entrepreneur no longer has it.

Provided you have this time, preparing to sell your business one to two years in advance is advisable. The aim is to focus on improving the company, which will increase its value, make it more attractive to buyers and increases the likelihood of success. It is also important to remove obstacles that could hinder the sale and minimise its negative impacts and equity consequences.

You might find this interesting:  How long does it take to sell a business?

The work done during the preparation of the sale of the company focuses on identifying the critical aspects for improvement, acting on them, and reducing the possible risks that a potential buyer would perceive today. Throughout this article, we indicate some aspects you should work on to prepare your business for sale.

It is time to get the company in shape to seduce investors. The “training” begins.

2. What products or services do you have in your portfolio?

The first thing to do is conduct an extensive analysis of your products or services. Analyse what your costs are, the margin you apply, etc. Ask yourself if diversifying your portfolio of products or services makes you more competitive and attractive to an investor.

Work on the differential elements of products that are difficult to copy, patents, exclusive area contracts, specific qualifications from the public administration, etc. Buyers can highly value any of the above. To do this, it is recommended to reflect on whether there are barriers to entry in your sector and see if you have key elements that will enable a buyer to overcome these barriers.

Linked to your portfolio of products and services, you should analyse whether they can be exported. That is, if they can be sold/offered outside your borders. Nowadays, many investors are looking for a product or service portfolio that is diversified in terms of customers and geography. They are looking for the product or service to be saleable in markets they operate in, often globally in the case of multinationals. If you have not done so, try to analyse the foreign market (for example, your neighbouring country) to see if it is beneficial to have new alternatives to commercialising your products or services.

Try to be product-oriented and not service-oriented. Even a service company can standardise them into an efficient product.

3. Preparing your business for sale: do you have control over your stock if you sell products?

To prepare your business for sale, it is best to keep a monthly inventory of your stock as up-to-date as possible and at market value.

If you have unaccounted stocks, you must regulate them if you do not want your company’s value to be reduced during the sale negotiation. Keep in mind that the buyer is not going to pay for unaccounted inventory. There may be tax contingencies, so this would open up “hot” negotiation points in selling the company.

Avoid stockouts. Plan your purchases and the stock you have in the warehouse so that any unforeseen event does not lead to a stockout with customers left out of supplies. For example, during the 2020 pandemic, some companies had to stop production due to the shortage of raw materials because they did not have a safety margin in their warehouses.

If you have not already done so, invest in good software for management control. Small and medium-sized companies usually find opportunities for improvement in day-to-day management with solvent software.

Overcome resistance to change on your part and the part of your employees. Good software is an investment that pays off in profitability, efficiency, and management control.

4. The importance of knowing who your customers are when preparing your company for sale

Here, the quantity and quality of your clients are key to an investor’s attractiveness. If your client portfolio comprises only a few companies, consider whether it is appropriate to look for alternatives.

New services or products

Create new products or services that allow you to have a diversified client portfolio and not depend on just a few. The investor will ensure that the company’s future is not compromised at the time of your exit and that they remain in charge of the company.

In addition, when selling the company, excessive dependence on one customer may lead to a reduction in price or a conditional payment in the future, depending on the maintenance of that customer.

Ideally, ensure no customer accounts for more than 15% of your income statement.

Qualify your customers

You should also analyse the quality of your customers. To do this, break down the margin you obtain with each one of them.

We have worked with companies where reducing sales by eliminating unprofitable customers resulted in an absolute margin improvement.

How you charge your customers is also important to prepare your business for sale. If you charge for your services in advance, for example, in the form of bonuses, be careful about the correct allocation of sales.

Sometimes we see that companies recognise the entire bonds as revenue when they sell it, and, in reality, they should recognise it when they provide the service. Failure to do this correctly can result in profit adjustments for the year that affect your margin and EBITDA. This can affect your company’s value.

Remember that company value will be key in negotiating the final sales price.

5. What about your suppliers?

In the same way, we talked about customers. The same applies to suppliers. It is not convenient to depend on just a few. Have alternatives to any rise in raw materials, any change in contract conditions, etc.

Look for alternatives to be able to face price increases of materials. In today’s environment, we see more and more industrial companies facing a generalised price increase in raw materials. Rising fuel and electricity prices accentuate this.

Companies with a more efficient material supply strategy (a more significant number of suppliers) and a repercussion of a price increase to customers will be able to defend margins better.

6. Preparing your business for sale: what condition is your machinery in?

If your machinery is obsolete, try to find a way to renew it and maintain it properly every year. If an investor has to make large investments in fixed assets (CAPEX) when entering the company, he will probably try to deduct it from the price he offers for the company.

7. Is your corporate structure suitable for the sale?

If you know you want to sell your company, as part of the sale preparation, we recommend hiring a tax advisor who is an expert in company sale and purchase transactions. You need to have an appropriate corporate structure according to the operation you want to carry out.

There are many corporate factors that you must contemplate when you prepare your business for sale that will affect it fiscally:

• A holding company forms the corporate structure.
• The sale of assets instead of shares.
• The inclusion of real estate in the company.
• Dividend policy before the sale.

You must have a tax plan for the operation between 6 months and a year before starting the sale of the company.

Factors with fiscal implications must be considered when preparing your company for sale.

On the other hand, family factors will also affect the sale and, in some cases, even prevent it. Some examples are companies with many shareholders, some even untraceable, companies in the hands of the “generation of cousins”, or in which its shareholders are at odds. Identify as soon as possible any possible family conflicts and put them on the table as soon as possible, and let yourself be advised and mediated by expert lawyers in these types of family conflicts.

8. The working conditions of your employees are also key when preparing your company for a sale

Company’s structure

The first thing to do is analyse whether you have become “the orchestra man” in your company. Does everything depend on you?

If that is the case, you need to professionalise your company. Create a structure that allows you to distribute responsibilities and in which everything does not depend on you. If you don’t have one, hire a general manager to manage the company and report to you as president or CEO.

This will allow you to make a much smoother transition when the buyer, whether a financial investor or an industrialist, enters the company. The deal often falls through when the buyer observes very hands-on company management, especially with international buyers.

Workforce

Focusing on your workforce, you must regulate all your employees, i.e., pay overtime, per diems, etc. Analyse the possible employment of freelancers or the status of partners who provide services in the company.

Buyers look for well-organised companies and do not want problems to arise because of any labour irregularities. All possible sources of problems detract from the attractiveness of your company. Therefore they can lead to complexity in the price paid in the form of contingent payments, escrow accounts or lowering the price.

The labour aspect in a service company is especially relevant for the sale of the company. As long as everything is in accordance with the current regulations, you will avoid possible contingencies in the sale process. Remember that the objective when you prepare your business for sale is to eliminate obstacles that may hinder the process.

Key employees

Also, it would help if you created a management team with attractive incentives for the fulfilment of objectives and with personal development plans to keep them loyal to the company.

It is advisable to involve key executives in the sale because you will need them to offer the best face to the investor and ensure that the company is in the best hands.

When you prepare your business for sale, it is desirable to prevent executives from leaving during the negotiation phases of the sale, as this could be devastating to the buyer’s perceived value.

One measure we have implemented on occasion with the entrepreneur has been to inform key executives of the sale idea and reward them with a percentage of the transaction value. This will encourage them to collaborate to improve financial ratios during this period.

9. Do you have a clear strategy for your company?

Improvisation is not a factor that attracts investors’ interest. Do not define your strategy “on the fly”. Small and medium-sized companies often do not have a strategic plan.

Strategic plan to prepare your business for sale

A strategic plan defines some crucial points:

• Where the company is.
• Where it wants to go.
• The objectives to be achieved.
• The means to achieve those objectives.

Therefore, draw up a strategic plan containing all these, including a business plan for 3 to 5 years. Within your business plan, try not to generalise. Focus on doing a few tasks very well and not too many regularly.

You must involve your employees in this strategic plan, making them aware of it, defining the company’s overall strategy, and specifying it at lower levels that will take the form of action plans (departmental or of the different areas).

When you put your company on the market, any investor, whether financial or industrial, will ask for a realistic and credible but also ambitious business plan on which to base the company’s future.

This will help you give credibility and generate interest in the investor. Keep in mind that the buyer will have more resources and will accelerate the growth of your company.

Strategic plan’s compliance

When you prepare your business for sale, you must monitor the degree of compliance with the strategic plan starting from the operational management of the defined action plans to see its coherence and deviations.

In this way, buyers will see that the projections are being fulfilled when you are in the sales process. This will have a triple effect:

• Give investors confidence.
• Lower risk of the transaction.
• Increase your company’s value.

Advantages of having a strategic plan when selling your company.

Competitive environment of your company

Your competitive environment is essential.

Be sure to analyse your competitors during this process. Try to track your competitors’ performance annually and compare yourself with them.

It is crucial to make an industry comparison. You need to identify if you are growing at the same level as the industry.  Are you below or above? Are your margins aligned with those of the industry? If not, try to find the reason behind this situation.

You have to know what your role in the market is to be able to negotiate the sale of your company.

10. How is your company doing financially?

Preparing the company for sale requires a thorough review of its financial status. This extends across many areas, from real estate assets to the company’s cash surplus.

Balanced scorecard

A balanced scorecard is a management tool that facilitates decision-making. It gathers a coherent set of indicators (KPIs, key process indicators) that provide top management and area managers with a coherent vision of the business or their area of responsibility.

Do you have a balanced scorecard for the financial control of your company? If not, now is the time to do it.

The information provided by the scorecard helps focus and align management teams, business units, resources, and processes with the organisation’s strategies.

Budgets

Although it sounds logical, preparing annual, quarterly, or monthly budgets is important. Preparing an annual budget at the end of each year is necessary for the successful planning of the company. Also, for setting short-term objectives.

In addition, keep control of your accounts monthly, calculate budget deviations and look for their origin.

Debt’s managing

Seek to define your company’s financial debt. It is crucial to be clear about what is part of the company’s debt. We refer specifically to the debt with a financial cost to banks and any other institution (leasing, bondholders, invoice discounting, etc.).

In this sense, it is also necessary to differentiate debts with customers, such as advances, that are generally considered debt.

Another issue that you must manage is debt with partners. If it exists, you must formalise it through loan contracts so that it is clear how it will be amortised when it comes.

Real estate assets

The company frequently owns the asset where it is located. Sometimes, it even owns unnecessary assets for the company’s operation. Analyse the real estate assigned to the operation of the company.

It is always advisable to separate the real estate activity from the productive activity, charging a market rent to the company.

Surplus cash

One point that it is recommended to review is the surplus cash. In small and medium-sized companies, it is common to find a conservative profile, where the profits of previous years have not yet been distributed and have increased the cash flow.

At the company’s point of sale, it is necessary to extensively study the real cash needed for the company operation (working capital) and have a clear idea of the amount that can be distributed to the partners before the sale.

Finally, avoid cash flow tensions. Manage your cash, if possible, by charging your customers in advance, generating a positive cash flow cycle.

11. Valuate your company before facing the sale process

The valuation of your company is an essential step during the sale of a company.

The valuation will allow you to understand the strengths and weaknesses of the company from a financial perspective. These strengths and weaknesses are translated into numbers and affect the company’s value. This is especially important for preparing the company for a sale process.

You may be surprised by how the value changes when you touch some elements, for example, paydays or stock days. It will help you understand how potential buyers tend to value the company. This way, you can maximise the price by taking steps before the sale that will affect the valuation.

You must take time to understand the different valuation methods. Also, the values of companies similar to yours that have been sold. This way, you’ll have a logical orientation of your value range depending on your actions.

You might find this interesting:  The usefulness of the business valuation process. 

The importance of preparing your business as well as possible for sale

During the final stages of the sale, the potential buyer will always perform an audit or due diligence of the company’s financial, legal, commercial, labour, environmental, and business aspects. Therefore, anticipating possible contingencies that may arise in the due diligence is essential to prepare your business for sale.

On the other hand, there is a lot of information to prepare for the buyer’s review. Anticipating its preparation will speed up the subsequent review process and alert you to possible deficiencies in the information.

As you have seen, you cannot go out to sell without first preparing yourself. Start training now if you want to reach your goal and sell your company. Preparation will be the key to your success.

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