Does Your Manufacturing Company Need a CFO or a Controller?
This blog was originally written in 2021. It has been updated with new references and resources.
3 min read
Joe Hellman, CPA
:
March 25, 2021
March 25, 2021 - "Should I sell my business?" It's a question every owner asks themselves sooner or later. The decision to sell your business, whether you plan to stay on board or exit post-close, is obviously not one to make quickly – or alone.
Before you start lining up buyers, keep the following considerations in mind to be sure you're prepared to sell your business.
Self-awareness is the first step in getting ready to sell your business. It underpins almost every aspect of the transaction, from motivation and timelines to valuation and negotiation, and helps you understand what's right for you and your business.
Business owners need to ask themselves the following questions before making the decision to sell:
The basic principles and parties of selling your business might seem simple – buyer, seller, offer, etc. – but the process is incredibly complex. Below the surface of any M&A transaction, there's a layer of nuance that influences the entire process.
It's hard to foresee things like timelines and schedules, points of contact and representatives, and the elements of negotiation before you decide to sell your business. In our experience, there are two things most first-time sellers do not realize before they begin the process: The time and effort that selling a business takes and the importance of a strong, trusted team to support and guide you.
Every action you take during an M&A transaction has an effect on the overall transaction. After all, if the deal is successful, your assets will become the buyer's assets; your pain points will become their pain points.
It goes without saying that your desire as a seller is to maximize value. On the other side of maximizing your value is the buyer’s desire to minimize their liability. If the seller fails to mitigate concerns and risks identified by the buyer, the transaction and terms can be at risk. Some of those problems are easier to address than others, but they will all take effort and time – and they are all important to a buyer.
Here are just a few examples of things about your business that could put buyers on edge:
A buyer's valuation of your business considers market trends and factors such as the above to derive an offer. The offer is a reflection of their confidence in the deal. Every business has ways to make itself better, but if your business suffers chronically from these problems and does not address them, buyers will not give you the valuation you want for your business.
The M&A process is a delicate balance of each party's goals against realistic expectations. If you are looking at selling your business, nothing is as valuable as a team you trust to strike that balance.
This blog was originally written in 2021. It has been updated with new references and resources.
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Editor's note: This piece was originally published in 2021 and has been updated to include additional resources.