Selling your Business? Plan for Success
Author: Christopher Porter
Date: September 2011
Publication: The Voice
Thinking of selling your business? Owners who invest sufficient time and effort in preparation typically sell their companies for a significant premium over those who come to market unprepared.
Surveys indicate that an increasing number of Canada's business owners intend to retire and sell their enterprises within the next few years. This growing supply of companies means that appropriate planning is essential to enhance the appeal and salability of your enterprise. Addressing the following questions can help you begin the process for a successful transaction.
What are my goals and optimal timing?
Selling your business should meet both your personal and business goals. Since different goals require different approaches, consider what you want for your future. Why are you selling? What financial returns do you expect? What is your ideal exit timing? Consult with a business or transaction advisor for experienced, impartial advice.
What’s my business worth?
Most buyers are interested in a company’s stability of revenue and prospects for growth. Thus price is influenced by your company’s potential, how attractive you make that look, and how well you support those forecasts. Past results are often seen as an indicator of future prospects. Obtaining a professional valuation can help to establish a baseline value for the business and identify ways to increase this value prior to sale.
How do we attract a buyer?
In order to achieve the best possible price, it’s important to understand the characteristics of prospective purchasers and what they are looking for. Strategic buyers, for example, are typically from the same or a similar industry as the seller and want attributes they can readily leverage, such as a new channel of distribution. Financial buyers generally look for established businesses with growth potential.
Transaction advisors can assist in identifying potential purchasers, canvassing the market, generating interest, and securing confidentiality agreements to protect the seller’s privacy.
What’s involved in the sale process?
Selling a company involves a well-timed and executed progression of marketing, prospect vetting, transaction structuring and due diligence. Transaction professionals can assist in guiding this process as well as preparing the required documents. This includes reviewing the letter of intent from the buyer, negotiating the terms of the deal and drafting the purchase and sale agreement. Once the buyer is satisfied that all conditions have been met and signs the purchase agreement, it’s time to pop the champagne cork!
If you are considering selling your company in the coming months or years, begin planning now -- the more time available to evaluate options and implement changes, the more bargaining power you will have and the higher your returns will be. That’s a plan for success.
Christopher Porter, MBA, CA•CAIRP, is a director of BDO Canada Transaction Advisory Services Limited. He provides consulting services to business leaders in service, manufacturing, recreation and knowledge-based operations. You can reach him at
(416) 369-3062 or cporter@bdo.ca.
