Ready for the next owner
Most entrepreneurs think that their company is ready to be sold when they are successful. When a company is profitable, this does not immediately mean that it is also "ready to sell". A company can be considered ready for sale when it can be sold within 6 months. The sale is in our eyes only successful when the company is sold above the appreciated market price and without influencing the current business processes during the sales process. The question of how ready your business is for sale is more than just a yes or no answer. The preparation process also provides insight into the overall health of the business.
Financially healthy company
Financial information must be shared quickly andup-to-date reports in a dashboard can offer a solution here. When financial information is not shown in a clear and transparent way to the potential buyer, this will create doubts in the minds of those interested.
In the case of a potential transaction, a forecast is made for the next three to five years. Besides the usual profit and loss account, it is customary to add an overview of the cash flows. This gives the potential buyer insight into the future profitability of the company.
In case of a carve-out, extra work is required from the finance team. There will be a standalone valuation to be made. The costs and revenues of the company must be separated so that the separate part of the company can be valued as a stand-alone. In the case of the revenues, this is probably easy. For the costs, choices must be made how for example the operating costs and marketing costs over the various activities will be divided. These choices must be well-founded and detailed, since the purchasing party will put these assumptions to the test.
Legal Certainty
It is important to have a clear picture of all the contracts you have with customers, suppliers, financers and other possible parties. It is wise to have all these contracts and commitments in order before the sales process starts. This prevents you from being confronted with surprises.
Deal structure
The future business acquisition can have different structures. Examples are a share transaction or an asset-liability transaction. It is important to have determined in advance what the structure of the transaction will be. If this changes during the transaction, it will significantly slow down the process. This in turn leads to additional costs that could have been avoided.
Potential buyers
Before the sales process begins, it is important to already make a list of potential buyers. It is also advisable to consider which parties you absolutely do not want to sell to. There are various tactics surrounding the potential buyer, which also require different preparations, asa private equity party or strategic buyer have different interests in the acquisition.
What steps do you still need to take in preparation?
At Florijnz we offer theZilvermeter. With this qualitative assessment, we evaluate all the important aspects that determine the sales readiness of you and your company. Even if you are not yet planning to sell, the Zilvermeter can give you insight into the health of your business.
Would you like more information about preparing to sell your business?
