6 little things that make a big difference to the value of your companySubmitted by Business Owner Succession Strategies | Edina, Minnesota on June 7th, 2021
Thinking it’s time to sell your business? Consider this: the tiniest miscalculation can cost you countless dollars – not to mention countless hours of stress and anxiety.
Misjudge a couple of minor details and a buyer can walk, leaving you with nothing. Get everything right, though, and you can successfully sell your business for a premium.
Here is a list of six little details to get right before you put your business on the market:
- Find your lease. If you rent space, you may be required to notify your landlord if you intend to sell your company. Read through the fine print and ensure you’re not scrambling at the last minute to seek permission from your landlord to sell.
- Professionalize your books. Consider having audited financial statements prepared to give a buyer confidence in your bookkeeping.
- Stop using your company as an ATM. Many business owners run trips and other perks through their business, but if you’re planning to sell, these treats will artificially depress your earnings, which will reduce the value of your company in the eyes of a buyer by much more than the value of the perks.
- Protect your gross margin. Oftentimes, when leading up to being listed for sale, companies grow by chasing low-margin business. You tell yourself you need top-line growth, but when an acquirer sees your growth has come at the expense of your gross margin, they will question your pricing authority and assume your journey to the bottom of the commoditization heap has begun.
- If you’re lucky enough to have formal contracts with your customers, make sure your customer contracts include a “survivor clause” stipulating that the obligations of the contract “survive” the change of ownership of your company. That way, your customers can’t use the sale of your company to wiggle out of their commitments to your business. Have a lawyer compose and review the language to ensure it has “teeth” in your jurisdiction.
- Take the BOSS Exit and Succession Planning Assessment to get started!
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.