If you want to learn how to build a valuable business and get top dollar for your efforts, read on. Many entrepreneurs for years building and working conditions in their companies with little or no idea of their value. One of my responsibilities to a Fortune 500 company built one of its divisions through acquisition. While we are successful, the division grew from $ 400 million to U.S. $ 600 million in revenue, I am very proud of the fact that wereceive nearly $ 1 billion if it sold. This price was 38% higher than anything designed internally or by investment banks we asked for alternatives sought. That was all created, as have value.
There are many factors to consider in order for the construction of value. In this article I want to the following address:
- What are the motives for the sale and purchase?
- What can my company do without me?
- What should I do when I go through theProcess?
- When is the right time?
- What should I do if I think it's time to sell?
What are motives for buying and selling?
To create value, it is important to understand why the sale and purchase occur. This understanding can mean the difference between receiving top dollar for your financial and "sweat" investments, the sale in a position of need, or at worst, get nothing. For example, you can order through the positioning of relying on several types of buyers youmore selective in your candidates and auctioning your company to a higher bidder prefer to only offer that is on the table.
The main reasons to sell:
- Shortage of working capital
- Need for growth capital
- Elimination of personal guarantees
- Age
- Health
- Boredom / burnout
- Liquidity / Cash Out
- Determined mismatch between risk and reward
- Market Opportunities
The main reason people buy a businessReturn on Investment. The justification for a return will include:
- Remove a barrier to entry
- Elimination of competition
- Strategic Fit (geography, people, property, workers)
What can my company do without me?
Imagine going to buy a used car, and the current owner wants to sell it to you for top dollar. It is a collective term, you can only have, without the engine and seats. In this scenario, it is likely that you go to take a lookdifferent types of vehicles. It is not that you can not put a new engine and / or seats in the car, but why buy a car in the first place? If your business success depends primarily 1 or 2 people, and you're one of them, you will have a very hard time selling your company, you can sell it at all. It is common for a business that has not invested in the search for finding the development and maintenance of the best talent. As when buying a used car, you want to know youBuy a reliable car that long after you will be held over the keys and title.
What should I do when I go through the process?
For those of you who have children, you already have one of those moments where you took the child from his eyes, and he or she disappears? They felt lucky nothing bad happened. Well, your baby. Whether you have a strong business or one that is artificially alive, I recommend that you continue to run your businessas if your life depends on it. On average it takes 12 to 18 months to sell a business. Worse, sometimes they do not even sell. Your competitors, customers and employees must not change or go away, because you decided that you want to sell. The last thing you want is to lose a major customer or key employee, while I am in this process. In addition, include some of the things that you go to be evaluated: how strong is your growth potential, customer and employee loyalty,To increase the staff strength and operational efficiency. While they do not look at the past, the buyers are now giving more attention and more pay, if the path to the top.
Most of us have gone and housing search would agree that you are willing to pay more for a house that you think will appreciate more value than others, has all the extras, is located on a large lot, beautiful paint, no To be paid disorder, good lighting, joyful atmosphere and great landscaping. Invest in your companyas never before. I want to invest in human development, improvement in the atmosphere, team building, painting, and signage. Hopefully you have done these things all together. If you do not, you will be pleasantly surprised by the results that you've been missing be surprised.
When is the right time?
Sell when the market is ready. Wait until you are ready can be a big mistake. The idea is to sell high and make sure that you are not paying too much to continue working. I attended a Seminar offered by SmithBarney Citigroup, and they presented a very interesting analysis on the payment for the privilege of working. The Geneva Capital Strategies Group has an analysis of historical events, and showed where owners were actually losing money by combining their businesses. You would actually have been better, from reinvesting the net proceeds after taxes from the sale into other investments and do not participate in working life.
It is usually not a good idea for you to sell your> Company if it is below, or if you think that the prospects are good. Buyers see the same things you do and rarely buy what the seller says that he sells. Even if they do not agree to have the buyer generally will try to take the benefits in terms of price. It's always good when business is good (running as market-sell shares, and increase sales, higher margins, and business is strong).
What should I do if I think it's the time?
Do not attempt this walkalone. I can tell you know firsthand that people the wrong kind of advisers or no cost even 20% or more on the sale of cheap rented. There are reasons why people living in this area. For example, the structure of your much wrong 20-50% of cash costs in the bag. Moreover, it is very important to voice support for a number of qualified buyers to the table and get someone very experienced in negotiating the sale of a business. Therehave been cases where sellers have been able, more than double their price by competing with the parties and an experienced negotiator working on their behalf. Just because you have a good negotiating skills make not qualified to sell your business.
The following are some of the various consultants are, you should consider when selling:
Business Valuation Experts - Regardless of a business agent, hire an evaluationExperts to determine what your company is worth. Contrary to popular belief, there are no rules of thumb are used, to determine value. Each company is different, and you need to know what you are worth before you get into the emotions of the process.
Business Consultant - Before you hire someone to sell the business market, you can do to increase value. Introduction of a consultant to objectively, how to increase searchProfits and strengthen your team can yield huge dividends. Depending on how the buyer to assess your company, each $ 1 increase, you increase the profit or revenue growth by cutting costs by $ 10 in price.
Mergers & Acquisitions Expert / Investment Banks - They help you every step of the acquisition process. You will develop your Offering Circular, develop a sales strategy, identify potential suitors, advise on pricing, packaging andKey positions and give your business maximum in a confidential manner. They have generally willing and qualified buyers, access to the right people, highly skilled employees and excellent negotiating skills.
Business Brokers - In the case of smaller shops, a business broker can help you market the sale of your business. You will not receive the same quality as mergers and acquisitions or Investment experts. They need someonethat will bring multiple buyers and negotiate effectively on your behalf. Many in the industry do not work on this full time and act very much like real estate agents. However, the good can bring many benefits, you can help dramatically reduce how long it takes, and then increase the value you receive for your business.
Accountants and lawyers - seeking good legal and accounting advice is a must. However, many people put too much trust in their accountants andConsult with attorneys on the value to find the deals and the evaluation of tenders. These are not their specialty, and they are not best suited to help you in these areas. In some cases, your lawyers can be helpful in the negotiations, but that depends on their specialty practice.
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