You spent a lifetime making mistakes and learning how to be successful in your chosen field or industry. Through trial and error, you learned how to monetize your business and establish your brand in the marketplace. Revenues and profits are stable, and you may be thinking about the next step for your company – either succession to the next generation or a liquidity event.
But how do you position your company to sell for the highest value?
Entrepreneurs are experts at building, nurturing, and structuring their business.
The skills, expertise, and knowledge required to start and build a business are well known. You analyzed the market, developed a product or service to meet the needs you identified, and took deliberate, calculated steps to bring that service or product to market. The focus of your efforts was on growth, market expansion, and profitability.
But what worked during the growth stage may not be what private investors or capital managers look for in their next investment.
It usually takes 12 – 18 months of focused, deliberate attention to groom a company to withstand a potential investor or buyer's stringent due diligence review. During this transition stage, a different mindset and perspective are crucial to the company's ultimate success.
The Transition Stage requires a Focused, Deliberate Process
During the transition stage of preparing your company for a strategic exit, the shift from an owner's perspective to a buyer's mindset is crucial. Buyers take advantage of sellers who make decisions from the entrepreneur's perspective.
You can begin to implement proven methodologies and strategies inside your company during the transition stage. The reward will be apparent as you and the buyer determine the value of your life's work.
When you are as systematic and strategic in the transition process as you were during your business's growth and expansion, it will be reflected in the final outcome.
If Your Company is Family Run, it must Transition to Professionally Managed
Many entrepreneurs who start their businesses rely on family and friends to help run various departments or operations. The company growth and expansion are primarily due to the founders and core personnel's dedication and hard work. But at some point, if the business is going to expand into the next level of growth, professional management standards become necessary.
Professional management procedures and processes focus on consistency, accuracy, and reliability. Industry standards, accounting mandates, and clearly defined processes and systems are mandatory in a professionally run company.
The fact that your CFO is also your brother-in-law isn't important to a potential buyer. Instead of respecting personal or family relationships, a buyer will immediately reduce their offer if there are not consistent, audited financial records.
If there is a lack of consistency in the sales process, a potential investor may not have the same confidence that sales will continue after the capital injection. If there is a pattern of claims or lawsuits from vendors or customers, the company's succession may be jeopardized.
When you have adopted a buyer's mindset, you know that what happens after the sale is more important than the current status of the business.
The End Result
When you examine your company from a buyer's mindset, inefficiencies are reduced, scalability increases, and consistency in performance is assured. The end result is increased stability, consistency, and growth, which directly impacts value.
Doesn't your life's work deserve the effort necessary
to transition to the best and highest result?
To learn more about creating a strategic exit plan, please visit GrowthtoExit.com. Over 12 weeks, we teach you what a buyer looks for inside a company and the steps you can take to ensure the buyer likes what they see. Pre-sale planning is essential to a successful exit.
Your company is the product. Growth to Exit is the process. The buyer is your customer.
THIS INFORMATION IS FOR GENERAL INFORMATION ONLY. IT SHOULD NOT BE CONSIDERED LEGAL ADVICE AND DOES NOT NECESSARILY REFLECT THE OPINIONS OF TSG PUBLISHING. YOU SHOULD NOT ACT ON INFORMATION RECEIVED FROM GROWTH TO EXIT® WITHOUT FIRST SEEKING ADVICE FROM YOUR LEGAL COUNSEL.