Exit strategy? - be prepared
It may sound obvious, but I thought I would raise the issue of ‘preparation’ in business sales as many transactions I have been involved in recently have illustrated a distinct lack of it.
I have written previously about making the business as autonomous as possible from the current owners – this is the key method to successfully inflate your sales price. There are several other simple procedures which a vendor should undertake
to ensure a smooth sale for a maximum value.
• Ensure monthly management accounts are prepared and retained. Many owner managed businesses do not have formal management accounting procedures and the absence of regular balance sheets can make lenders unnecessarily nervous. It may be good practice to hire a part-time Finance Director to oversee this.
• Communicate. Many transactions require secrecy for staff, customers and suppliers. However it will aid the sale process if certain key management can be informed, as access to these individuals and the information they hold, will make the acquirer and their lenders more comfortable.
• Legal advice. A good corporate lawyer is fundamental – not only to the smooth completion of a transaction, but also to ensure that is the acquirer adequately protected against future problems via warranties and indemnities.
• Write up statutory books. This is a mundane job, but may save plenty of time for the lawyers on both sides.
There are many other areas to prepare for, and I will post these over the coming weeks.
