To prepare a business for sale it must first be packaged.
To bring a new opportunity to market means properly preparing the business for sale and review by potential buyers.
Here is a list of the key milestones and typical timeframes to prepare and bring a business to market.
Planning – Understanding the financial drivers of the business and recasting the P&L to estimate the cash flow.
Valuation – Looking at the previous years recasted cash flows and applying industry specific multiples to better understand what qualified buyers are likely to offer for the business.
Packaging – Creating a Confidential Information Memorandum (CIM) to accurately present the business to interested buyers. The CIM will be very similar to a business plan and should include past financial statements, industry specific metrics and key competitive advantages of the business being presented.
Identify Strategic Buyers – This is a list building project to identify who is likely to be interested in this business and is capable of making an acquisition.
Go-To-Market – Effectively reaching the buyer community with a anonymous description of the business. The goal is to attract interested buyers and begin to describe the business opportunity.
Screen Buyers – A strong business will attract considerable interest. During this phase, the buyers are interviewed and filtered in order to identify the highest quality buyers capable of making an acquisition.
Negotiating Deal Terms – Most offers require a round or two of negotiations. Working with clients to keep the negotiation process on track and the requests reasonable is a key benefit or working with an experienced advisor.
Due Diligence – This is the inspection phase of the business and involves the buyer reviewing all key legal agreements and financial information for the company being sold.
Closing – This is the final negotiation of the purchase agreement. This phase typically will involve the attorneys from both parties and results in a signed agreement and transfer of funds.
Preparing a business for sale can be a straightforward and well defined process. Working with an experienced advisor can greatly simplify the process and allows the business owner to continue to run the business while a new owner is identified.