Maybe you’re not sure if you are ready to sell your business, but you’re curious about what you could learn if you put it on the market. You can always put your company on the market at any time, but you should understand the right way to do it, and everything that you need to consider.
First things first: if you are putting a business on the market, there is going to be a great deal of preparation to do. Prospective buyers are going to expect to see documentation that demonstrates the health and growth potential of the business. Your financial records must be in order, as well as all records regarding inventory, taxes, customers, vendors, real estate, equipment, leadership—essentially pretty much everything related to the business. Buyers are going to want to see stability that boosts their confidence in the company and its ownership, so you’re going to need to have your due diligence organized—even if you’re not sure you want to sell. This is not only because a company in shipshape can lead to a higher offer, but you also want to be taken seriously as a seller. If you’re going to market, you need to do it right. Otherwise, it could damage your reputation and deter buyers from considering your business when you are ultimately ready to sell.
For most businesses, deal preparation can be an extremely daunting task and can pull an owner in different directions, shifting focus away from the daily operations of the company. If buyers can see that preparation is lacking and the owner appears frazzled in providing information, it will surely have a negative impact on a possible offer. So, not only does there need to be adequate time to prepare, but the owner should also consider enlisting the guidance of a professional, such as a mergers and acquisitions advisory firm. CPAs and lawyers can be helpful, but an M&A pro has more appropriate experience in the sale of a business. They will help you facilitate the delivery of data and information, manage your expectations, provide you with connections to buyers you won’t be able to find on your own, navigate the market, and help you avoid major mistakes and pitfalls along the way—all in the interest of getting you the highest possible sale price for your company.
Selling a company should also include the vitally important goal of maximizing its value. Operational, marketing, and cultural improvements can give you much more control over when you sell your business and to whom. So, even if you’re not sure about selling, getting ready to sell can do great things for your company. It will also position you to continue to benefit from these changes up until the time comes that you are ready to pull the trigger, possibly maximizing your business’s value even more.
The timing of when to sell your company can make a significant difference in what you walk away with, so deciding when to sell is a crucial decision. Timing a sale is no simple task, considering that market conditions, the company’s health, and the owner’s personal circumstances can always be changing. There are also economical and geopolitical factors to consider based on where your company is located geographically and where potential buyers may be located.
It is important to know when the M&A market is hot for your particular type of business. An active M&A market increases the chances that your deal will close for a higher value. If you miss out on the opportunity to sell during an active market, you may never get that chance back. During slow M&A markets, it can be much harder to close a deal even if the price represents a great opportunity.
M&A markets can vary between industries and often depend on the state of the economy. Under economic expansion, M&A markets heat up, causing big companies to step up their acquisition efforts and shareholders of public companies are seeking growth. The opposite is true under a down cycle. But it really depends on the sector that your company operates within, as some companies can still thrive during economic lows. This is another area where M&A experts can help. They have intimate knowledge of the markets based on sector and understand what’s happening on the competitive landscape, as well as familiarity with current buyer appetites. They can identify opportunities and advise as to what they anticipate to be the right time for you to get the most value. Plus, they can also have knowledge of particular buyers that may be interested based on certain factors that lie outside of economic conditions.
So, can you put your business on the market even if you’re not actively looking to sell? Sure, you can. But here’s the key: you don’t want to appear to be a tease to buyers to the point where they will not take you seriously as a seller when you actually are ready to do a deal. And you don’t want to go to market until you’ve gone through the proper preparations to do so. Not getting this right can negatively impact your company’s value. An M&A advisor can help you manage these situations while preserving your reputation as you work through the process. They can also advise you regarding the timing and if they feel you should act now or hold off. You might be surprised by what you think may be the wrong time can actually sometimes be a good time to sell.
Let Us Help
If you are thinking about putting your company on the market, our world-renowned experts at Benchmark International are a great place to start. We can help guide you through the process and determine what is best for you, your company, and your family based on your circumstances as well as goals for the future.
Americas: Sam Smoot at +1 (813) 898 2350 / Smoot@BenchmarkIntl.com
Europe: Michael Lawrie at +44 (0) 161 359 4400 / Enquiries@BenchmarkIntl.com
Africa: Anthony McCardle at +27 21 300 2055 / McCardle@BenchmarkIntl.com
ABOUT BENCHMARK INTERNATIONAL
Benchmark International’s global offices provide business owners in the middle market and lower middle market with creative, value-maximizing solutions for growing and exiting their businesses. To date, Benchmark International has handled engagements in excess of $6B across various industries worldwide. With decades of global M&A experience, Benchmark International’s deal teams, working from 12 offices across the world, have assisted hundreds of owners with achieving their personal objectives and ensuring the continued growth of their businesses.