Seven Ways To Get More Value For Your Business

Thinking about selling your business? You are not alone. As the Baby Boom generation reaches retirement age, more and more business owners are looking to transition away from the companies they have been running. The value of your business probably represents a significant percentage of your total net worth. If you wish to adequately fund the retirement lifestyle you have earned, you must get every last after-tax dollar when selling your business.

Seven Proven Strategies for Receiving the Most Value for Your Business

1. Preplan the sale of your business

   
   This should not be a spur of the moment decision. Rather, it should be well planned in advance. Conventional wisdom dictates that the average American spends more time planning their vacation than their retirement. While small business owners as a whole do not have the average mindset, it is vital that the proper planning goes into the sale of a company to maximize its value.
   
   For more information on this topic, consider reading Plan Your Business Exit the Day You Launch.



2. Maintain complete confidentiality.

   
   It is vitally important that your employees, competitors and customers not be aware of your plans, as the loss of employees, customers, or suppliers can rapidly decrease both the value and marketability of your business.
   
   The importance of confidentiality is further explored in Informing Employees of the Sale of Your Business.



3. Do not put a price on your business.

   
   Once you put a price on your business, you create a ceiling, and you miss the opportunity to find the ideal buyer who would have otherwise willingly paid more.



4. Recognize the importance of finding the right buyer.

   
   Most businesses don't have a value that is set in stone. Rather, businesses have a range of value. This means that different buyers will have different perceptions of the same business's value. Thus, it becomes important to pre-plan your confidential marketing effort to gain exposure to multiple acquirers, especially synergistic buyers - those buyers who, because of their location, complimentary customer base, financial resources, and/or market position, can profit more from owning your business and are therefore willing to pay more.
   
   Sometimes the perfect buyer for your company is not as obvious as it seems. See our case study One Client, Two Buyers for an outside the box solution we found for one of our clients.



5. Recognize the risks in financing the buyer.

   
   Your objective should be to get cashed out, as the risks involved in financing buyers are considerable. A default can have a major negative impact on your retirement plans.



6. Get professional help.

   
   Unless you have a background in taxes, legal issues and merger and acquisition work, you will probably unknowingly make a multitude of costly mistakes by trying to sell your business yourself. In fact, those mistakes, when combined with money lost from a transaction that doesn't yield the best possible value, will typically cost you substantially more than professional and competent assistance.



7. Do not pay advance fees.

   
   While you ultimately will need help in determining the value of your business and will need the right merger & acquisition firm to take you to market, there is no need to pay for their services in advance. Their fees should be earned and not paid until they have achieved the results that you want.

If you follow this advice and use the good judgment that made your company pjrofitable in the first place, you will be well on your way to getting the maximum value for your business and moving forward with a well-earned retirement.