HOW DO I PREPARE MY COMPANY FOR SALE?

The value of your company is in the eye of the buyer; therefore, sellers of middle-market companies should position their businesses to drive the strategic value and attractiveness before a possible sell transaction. Enhancing the value of your company is an ongoing process; sellers should prepare their company for sale 18 to 24 months before marketing their company. The following actions will help you start the process:

• Clean-up the balance sheet: dividend out extra cash and securities not required for working capital; write-off uncollectible accounts receivables and obsolete inventory; sell off non producing assets; eliminate stockholder and employee loans; and, record all company liabilities such as vacation time and other employee benefits.
• Put “change of control” agreements in place for key employees: the buyer’s perception of value is strongly influenced by the retention of key employees. Incentives in compensation and change of control agreements with key management will help maximize company value.
• Position the company for income and opportunity: Identify the drivers of value, elevate existing processes; control the expenses, do not take excessive compensation, negotiate leases that will not hinder a sale; prepare financial projections for the next few years.