We have helped many business owners improve the value of their companies. As discussed in our prior articles, there are clear strategies owners should pursue prior to selling their companies that can substantially increase their financial return. In fact, it is often possible to more than double the value of a company in the years prior to a sale.
One of the strategies that can improve an owner’s return is resolving issues within their company before buyers discover the issues during the M&A process. In other words, get the skeletons out of the closet. Buyers often discover these issues after an initial price has been negotiated and a Letter of Intent has been signed. When this happens, the trust you established with buyers is tarnished and buyers often want to renegotiate the price. In addition to impacting the deal’s momentum and value, it also delays the sale process. And time is often the killer of deals.
What type of issues should you resolve before putting your company on the market? While there are many factors you should assess, here are some of the issues you should evaluate:
· Incorrect or improper accounting
· People issues, especially on the leadership team
· Quality problems
· Poor on-time delivery
· Employee retention and culture issues
· Ineffective processes or planning
· IT and technology issues
· Not having a plan for the future
If you know there is a problem, take the time to resolve it prior to selling. This will not only eliminate problems during the sale process, but it can also improve your financial return both before and after the sale.
If you would like to learn more about how to improve the value of your company, reach out to us at Anavo Growth Partners. You can also find additional articles on our blog page, including more articles on ways to amplify your company’s value before you sell.
