What You Need To Know Before Preparing To Sell Your Company

6 min read

Preparing To Sell Your Company

Preparing to sell your company?

Congratulations!

You’ve beaten the odds and you’re company has made a difference.

You’ve asked the only question to ask before selling your business, and you’re now raring go.

This next part of your journey is a game changer.

But here’s the thing.

You only get one chance, and you better make it count.

You’ll hear a lot of advice from well-meaning people.

And most of the advice you’ll receive is wrong.

Worst yet, you won’t hear the advice you actually need to make a difference.

Who am I to say this, you ask, and how do I know?

I was that kid who started his business right out of school with no money, experience, or team. Like yourself, my company was a success and of interest to buyers.

Before selling my company I became obsessed with how to sell a company and win.

The results?

I had a 9-figure exit.

But it almost didn’t happen.

I learned that buyers want you to make mistakes. The more mistakes the better because your company value plummets.

Wait a minute, you protest, what about my investment banker and advisors?

Your investment banker will do many transactions with your future buyer. You’re a one-time transaction.

The odds are (deliberately) stacked against you.

What’s the secret to my 9-figure exit?

I found five little-known strategies that you must do when preparing to sell your company.

What are these five strategies?

Keep reading.

 

 

The Best Is Yet To Come

Preparing To Sell Your Company

The future belongs to those who see possibilities before they become obvious. – John Sculley

When preparing to sell your company, stop.

Stop and create the vision for your company after the sale. Imagine what your company can achieve with more money, talent, and experience. Company culture is great, but it’s not enough.

Check your ego at the door.

You may be over-the-top brilliant in specific areas. And other people are better than you in other areas.

Your future buyer is looking for markets that you should be in but aren’t. Don’t forget about opportunities you didn’t pursue but couldn’t from lack of resources.

What may seem like negative points to you are areas that get your future buyer excited.

Once you have your vision of the future, do two things.

First, create a strong and aggressive financial forecast with these new opportunities. With the right talent and capital, the sky is the limit.

Second, craft a compelling and interesting story about how you’ll get to the next level.

Everyone loves a great story.

Put your judgment aside. You don’t know what you don’t know.

Let future buyers draw their conclusions. They’ll do it anyways.

Paint the canvas with a compelling story backed by a strong financial forecast.

When preparing to sell your company, your buyer needs to know that the best is yet to come.

Create A Strong Financial Foundation And Laugh All The Way To The Bank

Build your house on the rock. – Matthew 7:24-27

Preparing to sell your company means you’ve built a financial system on solid ground, not sand.

Your future buyer is all about your “EBITDA.”

When preparing to sell your company, get used to all kinds of acronyms. EBITDA stands for ‘earnings before interest, taxes, depreciation, and amortization.’

EBITDA is everything to a buyer.

You can start by having your accountants create audited financial statements. The ‘notice to reader’ statement is for amateurs.

Your audited statement better have all personal expenses removed. And while you’re at it, cut unnecessary expenses.

Ask yourself if you need a certain activity or item to profitably run your business. If the answer is ‘no,’ your future buyer won’t do it and neither should you.

While you’re at it, pay yourself a market-rate salary. The sooner, the better.

Why?

Your future buyer won’t have the chance to put an over-inflated value for your position.

Make sales and growth your focus. Every cockroach startup does this, and so should you.

Last, but not least, ensure you have a CFO in place. A CFO gives you credibility with the buyer. You’ll enjoy stronger financial controls and processes.

The bottom line is the bottom line.

When preparing to sell your company, every one of these actions increases your EBITDA.

And a higher EBITDA makes your company more valuable.

You can take that to the bank.

When It Comes To Your Facility And Lease You Better Be Saying Hello Beautiful

Preparing To Sell Your Company

You’ll never get a chance to make a second impression. – Will Rogers

When preparing to sell your company, know that you don’t get a second chance to make a great first impression.

Start with your facility and your lease agreement.

Ensure your facility is sparkling and clean.

Your future buyer will visit your facility.

Admit it. You judge people by how they look. So does your future buyer.

A fresh coat of paint does wonders for your facility presentation and morale.

Preparing to sell your company also means that your lease allows you to assign it to the new owner. If your lease prevents an assignment, either change it or find another facility.

I’m kidding, right?

Not a chance.

Your future buyer doesn’t have the time or patience to fight with a miserable landlord.

And if you happen to be the landlord because you own the building, you better charge market rates for rent.

Too high of a rent hurts your EBITDA. Too low of a rent has your future buyer penalize your value.

Be smart.

When preparing to sell your company ensure your facility looks beautiful. And while you’re at it have a transferable lease.

But you’re not out of the woods yet.

Do you know the one overlooked area that either lowers value or kills deals?

Keep on reading to find out.

 

 

Preparing To Sell Your Company Ensures Your Team Is The Dream Team

Teamwork makes the dream work. – John Maxwell

Preparing to sell your company for greatest value means you not only have a team, but a dream team.

How do you know when you have a dream team?

You’re dream team both runs your company without you and achieves higher profits.

If you’ve done your job right, you need your team more than they need you.

And because your a smart owner, in preparing to sell your company you’ve done three things.

First, you’re not playing games and classifying employees as contractors. If it looks like a duck and quacks like a duck, it’s a duck.

Your future buyer will walk away or lower your value if your employees are contractors.

Second, lock in key employees with a bonus plan.

Don’t for a moment even consider giving away ownership in the company. It’s a fool’s game, and everyone loses.

Instead, take a pay-for-performance bonus that pays a third each year over three years. Should an employee walk, the remaining bonus on account stays with the company.

In a few years, employees enjoy the waterfall payment of bonuses and have every incentive to stay.

Last, bite the bullet and write out an operations manual that details everything. Your buyer wins with peace-of-mind, and you win with a higher value.

But you’re not done yet. Do you know the one thing you must do that most owners don’t?

Keep reading to find out.

Bring In The Cavalry Early To Seal The Deal Later

Preparing To Sell Your Company

If you pay peanuts, you get monkeys. – Chinese Proverb

Preparing to sell your company for the highest amount has you bring in the cavalry early to seal the deal later.

Most entrepreneurs are penny wise and pound foolish.

No matter how great you and your team are, you lack the experience of buying and selling companies.

A talented investment banker, tax advisor, strategist, and business lawyer is your cavalry.

Although I had a 9-figure exit, I could have achieved more had I brought on an investment banker in the early days.

Why wouldn’t this be a waste of time and money?

Not a chance my dear reader.

Investment bankers provide strategies to grow your business.

Do things right and you become the talk of the industry, thanks to your investment banker.

Who knows, you may even create a market disruption and take your business to the next level.

When it comes time to sell, your company is both well regarded and sought after.

Taxes. Everyone hates them. Point taken.

But when you have the right tax advisor from the start, you have the luxury of minimizing taxes when you sell.

And the list of benefits goes on, and on, and on.

Preparing to sell your company has you find and bring in the cavalry early so you can seal the deal later.

 

Conclusion

In preparing to sell your company know that your journey is a game changer in every way.

Experienced buyers hope you make the classic mistakes most owners make.

And why not. Your loss is the buyers’ gain.

In preparing to sell your company, even when you launch, you level the playing fields.

Does this work?

Y.E.S.

When I played the game most owners played, the first offer for my business was 7-figures and 3 times EBITDA.

But I knew I could do better. And I also knew that I didn’t know what I didn’t know.

I learned and prospered.

Thirty months later I had a 9-figure offer that was 13 times EBITDA.

Same company.

In preparing to sell your company, do the heavy lifting now and reap the large rewards later.

The entrepreneur life is great when you play your cards right.

Preparing to sell your company gives you choices. Sell your company now or keep it forever. You choose.

Do things right either way, and you’ll retire happy and rich.

Here’s the great news.

Everything you need to be successful you have within you right now.

Your future success awaits you.

What are you waiting for?

Go forth and prosper.

You can do it. I know you can!

Here’s to you and your success.

 

Your BIGGEST Raving Fan,

 

 

Jeffrey Feldberg

 

 

 

 

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