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Getting Your Company Ready for the Big Dance

business for saleIf you’re like most business owners, you have fantasized about what it would be like to sell your business for a big pile of cash and hand the keys over to the next guy.

Maybe you heard that a competitor sold out and it triggered thoughts of what it would be like for you to sell. Perhaps you gained – or lost – a major client, or completed a major upgrade, and thought it was a good time to get out. Owners contemplate selling their businesses for a variety of very different personal and professional reasons.

If you intend to sell at some point in your future and you want to ensure that your company is well-positioned to achieve the highest possible payday and best deal terms, there are a few critical aspects that you can begin to address early on.

Let’s start with positioning your leadership team for inclusion in a future sale:

1) Be very deliberate about who you tell, what you tell them, and when you tell them about a potential sale.

This can cause a lot of aggravation for an owner who is considering a future sale. When do you inform your senior leadership team about your intentions?

If you wait too long, you run the risk of them finding out about a sale on their own. If you tell them too soon, you run the risk of creating unnecessary anxiety and losing them to a competitor. They might also tell someone else about the sale.

I recommend confiding in leadership as soon as you decide a sale will occur, even if the transaction is not about to happen. You hired smart people who helped you build your business. By informing them of your intentions, you’ll gain their support and they’ll be able to help you get your financial and operational house in order. You will provide for more business continuity both during and after the sale by having them invested in the process.

2) Consider offering financial incentives to your leadership team during a sale.

Financial incentives are a great way to align interest between executives and owners during a sale. Consider offering a severance package to select individuals in the event they are terminated by the buyer when the business is sold. For additional incentive, you could pay key individuals a small percentage of the sale proceeds over a period of time as a bonus when a closing occurs to encourage retention and performance.

In an upcoming blog, I will address additional areas that most business buyers fixate upon. By carefully preparing a business in advance, owners can significantly improve the likelihood of maximizing value when it comes time for the big dance.

2017-02-06T20:38:55+00:00

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