As a family business owner, you have heard the beating drum of “find a successor”. You probably understand the importance of identifying, training and preparing the next generation to run the business. But what if a successor isn’t an option? What if it makes more sense to sell the business? How do you go about making your business attractive to potential buyers and insure that you are maximizing your business value?
Who Will Go and Who Will Stay?
Will some or all of your management team stay with the new ownership? If so, then make sure that leadership is ready to lead without you. Creating an environment where you are no longer required is a great way to comfort a future buyer that the business will continue to be successful in the future. A good test to ask yourself is, “if I went on vacation for a month, would everybody know what to do?” If the answer is no, then it is time to put some training in place to get your team ready.
Clean Up the Books
Financials are key to any sale. A prospective buyer will want to look at your financial statements and make sure the company has been run cleanly and profitably. If you haven’t already, hire a controller or accountant (not a CPA) to review your financials and make sure they are ready to be presented to an outside party. This means making sure no personal or questionable expenses have been run through the business – like cars, country club memberships, etc.
Take The “Family” Out of The Business
If you are considering selling your family business to an outside party, then it will no longer be a family business. As a result, it is time to resolve any outside family issues that might impact the long-term success and/or profitability. Whether this means talking to family members about their future role or determining how the dollars received from the buy-out will be distributed, do these things BEFORE starting the selling process. Potential buyers don’t want to be faced with sibling rivalries or long-standing family disputes.
Boost Sales and Decrease Expenses
Potential buyers are going to be looking for good ‘curb appeal’ and in a business that means strong sales and low expenses. Before starting the process of selling your business take the time to do a harsh and realistic look at your financials. Where can you increase sales by growing current accounts or bringing in new business? Conversely, where can you cut waste and extra costs? Having a strong balance sheet will make you attractive to any potential buyer.
Getting your family business ready to sell can be overwhelming and emotionally draining. The process can bring with it a lot of unexpected feelings and family conflict. If you are unsure of initial steps, questions to ask, or on how to prepare for any transition, REGENERATION can help.