This is the fourth in a series of articles outlining the steps any business owner can take to maximize the value of his/her business when it comes time to sell. If you’d like to see previous articles in this series, visit our website at www.lmaallc.com. If you’d like a copy of the complete list of value drives, e-mail me directly at mertel@lmaallc.com and request the Value Drivers list.
- Be Prepared to Hang a Lantern on Your Problem
No business is completely flawless, but the mistake many business owners make is assuming that if they hide their flaws perhaps the buyer won’t discover or notice them. This almost never happens, and when the buyer suspects that he/she was deliberately deceived, this can undo months of confidence and rapport building between the seller and the buyer. It frequently leads to an 11th hour reduction in the buyer’s offer, and not infrequently kills the whole deal.
In my experience, a much better approach is to take charge of the disclosure of these aspects of your business right up front, or at least very early in the process. Several advantages accrue to the seller when you do it this way. First, right out of the gate you establish a reputation of being a straight shooter who has nothing to hide. Second, you control the news, and have an opportunity to put it in perspective, and explain what steps you’re already taking to remedy/minimize it. For example, “When I started the company I sold and serviced most of our larger accounts myself. However, I recently hired a VP of Sales and started taking more time off. Now when our customers need something, they call him.”
- Last, but not least, a Clean, Well-Ordered Workplace
This last point may seem trivial and unimportant, or it may seem so obvious as to go without saying; however, in my experience there’s no denying the positive impact that a clean, well ordered workplace has on a buyer. First, it creates/promotes an environment of pride, quality and efficiency. Second, it creates floor space/ counterspace/ storage space which translates to more capacity. Lastly, all other things being equal, what owner or employee wouldn’t prefer to come to work in a clean, well-ordered workplace?
If you know of a business owner who’s thinking of selling or buying a business and who might benefit from a complimentary, confidential, consultation with us, have them contact me at mertel@lmaallc.com
By: Mike Ertel, Transworld M&A Advisors