The Road To Building Value
As a founder or business owner, if you have reached the point in your entrepreneurial journey where you are ready to reap the rewards of your efforts, a sale of the business can provide the opportunity for key shareholders to cash out at a significant premium. At a high level, transferring ownership of your business through a sale represents an opportunity to:
- Build generational wealth
- Continue the business legacy
- Provide continued employment and growth opportunities for employees
- Fund your next entrepreneurial pursuit or retirement
The risk and rewards of entrepreneurship are often not only wrought with emotional highs and lows, but part of a much bigger career and financial journey. And, it’s important to understand that selling your business is not an event, it’s a process. A critical and often overlooked first step in this process is to reach out to an investment bank to serve as your dedicated advisory team.
Why Are Investment Bankers Essential When Selling a Business?
When it comes to transferring ownership of a business, investment bankers serve as confidential, expert guides in the selling process that help entrepreneurs avoid common and costly mistakes. These mistakes can make your business receive a subpar valuation or worse, cause the deal to fall apart! More importantly, your investment bank is able to drive value by developing and implementing a competitive process to identify strategic buyers who will pay more for your business.
It’s not just about finding a buyer – the process is designed to find the right buyer that aligns with your company’s culture and values, while being compatible with the buyer’s priorities. Listening to bad and ill-informed advice from the wrong people – maybe your buddies at the country club – adds confusion and hurts your chances of achieving your best exit. A confidential and dedicated investment bank will understand your career and financial goals before developing a process tailored to your priorities.
What Does Being Ready to Sell Your Business Look Like?
Deciding when the right time to sell your business is not a chance decision, although in some circumstances – such as illness or death of a key stakeholder – the timing might be beyond your control. Business owners often ask, “How long in advance should I begin to prepare my company for sale?” The answer is your company should always be ready to sell. However that’s not always the case.
Readiness to sell goes beyond a simple ‘desire to sell’ by transforming and showcasing the best version of your business to interested and competitive buyers. Again, the choice to sell your business should not only align with your career and financial goals, it should reflect a deep care and understanding for the future of your management team, culture, and the legacy of your business. Ensuring that your company is best prepared for a sale will ensure your financial and career goals can be realized.
Strategic Exit Advisors’ Building Value Roadmap helps to prepare business owners for success by providing a Readiness and Value Assessment to estimate the business value and identify significant value gaps.
Unfortunately, sometimes when business owners decide it’s time to sell, there’s a significant amount of work that needs to be done in advance of taking your business to market. This will protect you from receiving an unreasonably low valuation that wastes your time and deal terms that don’t meet your goals. This also saves you the financial heartache of not being able to sell your business or the setback of false starts, failed attempts and endless information requests and negotiations.
For decades, Strategic Exit Advisors has helped entrepreneurs to improve their value posture, building a strong investment proposition that meets market demands. A Readiness & Value Assessment tells you if there will be a market for the business. SEA’s Readiness Roadmap helps business owners with a clear and actionable path to improve their companies – making them more profitable, easier to manage the business, and as a result improving value.
What’s a Readiness & Value Assessment and How Can I Get One?
SEA is pleased to offer a complimentary Readiness & Value Assessment to business owners. This analysis allows you to quantify your value gap, or any discrepancy between the perceived value and the market value of the business. The SEA team will identify the top areas that are reducing the value of your company. This discovery process takes 45 minutes to complete and there is no cost or commitment to take this first step.
In part 2 of this series, we will lay out each stage of how our process builds from the Readiness & Value Assessment of your business to a successful sale. As you now know, there’s a significant difference between wanting to sell your business and actually being prepared with a solid, competitive business posture that’s valuable to strategic buyers.
We are ready to help you on your entrepreneurial journey. Call us anytime (215) 489-8881 or schedule a conversation here.