Maximizing the Value of Your Business Upon the Sale

It takes incredible patience, time and dedication to get a business running smoothly and profitably. When you finally decide to sell a business that you’ve poured time, money and sweat into, you probably want to realize the maximum possible value for it at sale.

In today’s market, harvesting the maximum value is dependent on creating a market of high-quality potential buyers -- or buyers who are willing to pay what your hard work is truly worth.

When talking with potential buyers, it is difficult to determine if they are the ones who could benefit from buying a business like yours. Buyers who understand the value you’ve created are more likely to pay a better price -- because they know how to capitalize on the strengths of the business and continue to grow it.

That sounds simple enough -- but as you consider selling your business, you have to look out for several hurdles.

When your business is on the market, you could contact dozens or even hundreds of potential buyers -- and only a fraction of those will be knowledgeable about your business. Even fewer will be willing to pay a strong value for it. For this reason, it’s always best to have an extensive selection of potential buyers and to be prepared that many of them will not be interested in acquiring your business.

In addition to time spent finding and communicating with buyers, the negotiations and legal work can drag on, with seemingly no end in sight. Working through negotiations, keeping pace with extensive diligence and managing conflicting personalities all takes time -- and meanwhile, you have to run your business.

The best way to manage these hurdles is to hire an M&A advisor to handle negotiations with potential buyers and drive the value of your business. Advisors with decades of M&A experience understand the buyer universe, allowing them to recognize the best potential buyers, identify opportunities to position your business and build a competitive market that will yield a strong value for the business.

How to Take a Sale from Negotiations to Closing

Having a potential buyer interested in your business is both exciting and deceiving. Once you begin communication with a potential buyer, the sale is far from finished.

 The next step for the buyer is to investigate your business and attempt to uncover any potential issues and liabilities that they may have to take on when acquiring it. This process can reveal issues that may have seemed small at the time -- but now decrease the value of your business or could kill the deal altogether.

 Before you consider selling, you should work with an M&A advisor to identify any value impairing issues. Unpredictable roadblocks, like changing market conditions, political changes like tariffs and shareholder disputes can be swiftly dealt with by an experienced M&A advisor.

 While you research M&A advisors to help you with this process, ask them about their experience in discovering and resolving issues during the sale process.

They should be able to tell you from experience some of the problems that they have worked to overcome during the selling process. For example, if there are tax or legal issues, advisors can work with existing accountants or attorneys to provide expert recommendations on how to reveal it to potential buyers, mitigate unnecessary costs and sustain a strong valuation.

Problems in business, like tax and legal issues, can create uncertainty that drives down value, causes buyers to walk away and / or weakens your negotiating position. M&A advisors can provide advice, from experience, on how to manage and safeguard against these issues to ensure your sale closes.

As its their sole function of their business, M&A advisors have the time to dedicate to every aspect of the sales process and brings the experience to facilitate your transaction to a close. While you keep your business running, M&A advisors manage communication and identify possible deal-breaking issues before they erupt -- so you can stay focused doing what you do best, while your M&A advisor spends time negotiating with buyers that are willing to pay a strong value of your business.

Preserving Legacy After Selling Your Business

You may be one of many business owners who worked hard to create a business that allows you to meet your non-financial goals. Whether it’s your business’ commitment to improving your community, the happiness of your employees or your influence within the industry, it’s likely that you commit to excellence within your business that goes beyond profit margins.

This is the legacy that your business could leave behind after you sell it -- and you may want a buyer that will continue its legacy and commitments.

If the legacy of your business is essential to you, your selection criteria for buyers gets narrowed down. Ideally, you will find someone who shares the same values and is willing to discuss the vision for your business.

However, finding a Company that shares your vision, or is willing to discuss it, compounds the difficulty of getting your ideal transaction done. You may get impatient and eventually be tempted to make unnecessary compromises.

To meet your financial and non-financial goals, you can hire an M&A advisor who understands the importance of your vision and legacy. An experienced M&A advisor can negotiate on your behalf to close a transaction with a buyer that is a good fit for your business and understands the value your legacy creates.

It takes time, work and a proven transaction process to cultivate and negotiate with potential buyers that will maintain your legacy and pay you a strong value. When you look for an M&A advisor, make sure to find one that’s committed to your business culture. This ensures that you’ll get the best value for your business without sacrificing your legacy.

Continue to Run Your Business While It’s Being Sold

As you embark on the journey to sell your business, you must continue running the business as usual. After all, your operations need to remain consistent and your company should continue to perform to maintain its value.

Meanwhile, selling a business is an additional full-time job. If you choose to take on the sale of your business on your own, you will find yourself in uncharted territory, with deal complexities, nuances and a seemingly unmanageable amount of work. This could result in cutting corners that reduce the value of your business or hamper the operations.

It is important to acknowledge the opportunity cost of trying to manage your business and manage the sale of your business at the same time. It is just not worth it. The best way to get the most out of a transaction is to hire an M&A advisor to streamline the process and drive the value of your business.

Additionally, the experience of an M&A advisor will bring to light other issues that tend to delay the close of your transaction.

Having an M&A advisor will ensure that your transaction is working towards a close and that you are selling your business with the most favorable terms available in the market. Working with an M&A advisor with a proven sale process allows you to effectively manage all aspects of operating the day-to-day tasks of your business while realizing the liquidity of your hard work.

How to Honor Your Business’ Mission -- Even as You Sell It

Every business owner has non-financial reasons for operating a great business. Often times this is rooted in the culture and mission, because it propels business forward and ensures a robust enterprise.

Security is also important: financial security for family members can be the driving force behind creating a business in the first place. Whether your family is related by blood -- or is made up of loyal managers and employees at your business -- you want the security that your company provides to endure long past its sale.

Security could look like many things: it could mean a promotion for a loyal employee after you’ve left the business. It could mean continued employment for a family member, as well. And in some cases, it can mean that family members can continue to weigh in on the direction of the business.

For others, the only concern might be that your business remains a secure and fair place to work.

Whatever of these non-financial goals is the most important to you; it’s possible to find a buyer who is willing to fulfill them. It just takes time, patience and negotiation with the right kind of buyer.

Of course, the more interested buyers at the table, the more negotiating power you will have -- so the smartest decision you could make would be to hire an M&A advisor that understands your financial and non-financial goals and will create a competitive market to have your goals met.

There’s more at stake for a business owner than the net proceeds of a transaction. There’s usually a deep sense of responsibility to employees and to the mission of the company. It takes experience and a process-oriented approach to complete a transaction with a buyer that will entertain all your requests -- you should work with an M&A advisor who understands your financial and non-financial goals.

Balancing Shareholders’ Objectives During a Business Sale

Shareholder interests are an important part of any sale -- and they can produce their fair share of conflict in unexpected ways.

While operations are consistent and the business is steadily performing, there usually isn’t much conflict among shareholders. However, once your business is in the market for sale, changes in the routine begin to reveal opinions, interests, and anxieties that may have been dormant before the sale process.

Shareholders may hold different opinions on the priorities of the business, which in turn can affect the type of buyers sought. Those who worry solely about the proceeds may be willing to sacrifice another shareholder’s interests for the best price. Shareholders who worry about employee security might be seeking entirely different types buyers.

As you move through the sale process, make a point to communicate directly with all shareholders to make sure that no one’s priorities are ignored during the sale of the business.

You might think you know your fellow shareholders well, but much like potential legal issues, you can underestimate the impact of personality conflicts and priority differences.

To ensure the stability of your relationship with other shareholders you should hire a professional M&A advisor that can act as your buffer to negotiate on behalf of each shareholder -- all while achieving the best set of terms from potential buyers.  

M&A advisors have the experience to represent theinterests of each shareholder during the sale process to make sure all voices are understood and accounted for.

M&A Blind Spot: The Best Buyers May Be Outside of Your Industry

If you’re ready to sell your business, then you likely have achieved great success within your industry. To run a successful business, you must understand all the ins-and-outs of your business and industry. From competitors and customers to adjacent products and services, you understand how to do business within your industry.

This expertise is a key element of running your business, but it can create several blind spots during a sale process.

You surely have connections within your industry. You know your competitors and possibly have a network that spans into adjacent industries or sectors. This knowledge causes temptation during the selling process as you might be consider selling your business to a company within your market. Limiting the list of potential buyers can lead to the sale of your business to a buyer that doesn’t offer a strong value.

Before this happens, you should discuss with an M&A advisor how other industries may view your company in the marketplace. Even better would be an M&A professional with experience selling companies in several different industries.

An industry-agnostic M&A professional can weigh in on how the rest of the buyer universe may value your business. The right M&A advisor will understand how to position your business to several buyer types. M&A professionals who have closed transactions in multiple different industries can identify strategies to position your business to buyers outside of your industry in a way that insiders often can’t.

Create Competition for Your Business Through a Sale Process

One mistake that business owners often make is settling for the initial pool of potential buyers that have reached out to them in the past or that they know from prior dealings. Not having a competitive market of potential buyers is the costliest mistake you can make in selling your business -- and it catches business owners time and time again.

M&A professionals typically review hundreds or thousands of potential buyers before deciding which of those to contact on your behalf: those that may or may not have been searching for a business like yours but are willing to pay the maximum value for it.

This process requires the skill of how and where to market your business -- not just to customers and competitors -- but to other potential buyers who have a track record of successfully acquiring businesses through an auction process.

You may be able to do any one part of this process on your own but putting all the pieces is a challenging and full-time job. Licensed M&A professionals do this for a living. They know how to broaden the market of potential buyers to create competition that entices the transaction to close at a strong value.

How to Build a Strong Deal Team

As you begin to consider selling your business, you’ll want to make sure you are represented by a strong deal team.

Selling your business is a delicate process. When you put your deal team together, it should include a licensed M&A advisor, your attorney and accountant, all of whom should be able to lend knowledge from prior their M&A experience.

To efficiently manage the delicate aspects of the sale, you must place a “quarterback” in your deal team with a significant amount of M&A experience. This person can lead the constant communication between the buyers and those managing your legal and financial diligence. Having a defined leader mitigates the impact of all possible issues and it helps to ensure that your transaction will get closed in a timely manner.

For a team of professional M&A advisors, managing these factors and potential conflicts between them is a tricky and time-consuming process. It is critical for you to have an M&A advisor ‘quarterback’ that can bring their wealth of M&A experience to ensure you achieve the best possible deal. All business owners should consider hiring licensed M&A advisors to facilitate the transaction.

Align Yourself With an M&A Professional During the Sale of Your Business

In the flurry of activity leading up to and during a sale, you may find yourself losing track of your goals.

Selling your business can be emotional and distracting. You will be required to navigate an overwhelming amount of choices, decisions, possible outcomes and external pressures. Since most business owners only sell their business once, you have one time to get it right. With the right support and direction, your choices can positively affect your business legacy and family for generations to come.

During a sale, business owners often lean on their family, colleagues, and friends, while others will solely rely on the input of their accountants and attorneys. However, to truly succeed in the mission of selling your business, you need to rely on someone who has experience closing transactions many times over.

As you build the team that helps you make these decisions about your business -- and your life -- it is increasingly important to align yourself with experienced professionals. A professional M&A advisor can bring a proven, systematic process to sell your business for a strong value and to a buyer who respects your vision and legacy.

It is critically important to align yourself with a professional M&A advisor that will look out for your best interest and work tirelessly to successfully sell your business under the best possible terms. A professional M&A advisor is best suited for this job because they have the first-hand experience with the hurdles a business owner will face when going through a sale transaction.