Prepare In Advance For A Potential Sale
Whether you are planning on working with an investment banker to solicit competitive bids or making a private sale to a worthy competitor, you can take steps beforehand to better position your firm to extract maximum value and legacy when it comes time to sell. The most important step is making sure your financials are in good order.
Some firms begin streamlining and cutting costs a year or two before they hit the market. Offloading team members that aren’t adding relationship value to the equation and curtailing unnecessary expenditures can increase profit margins. Showing growth in your profit margin adds to the value of your business.
Also, as we all learned this past year, the future is uncertain. You or your partner may have a medical or family emergency that requires stepping away from the business. If you’ve prepared in advance and have all the data at your fingertips, you will be better positioned to make an informed decision in a time of crisis.
When deciding whether to take the call from a potential suitor, I suggest that this is an opportunity to prepare for whatever may come and gain valuable insight into the determinants of the market value of your business. You never know where conversations may lead and who you may be able to network with down the road. Ultimately, when you take calls from potential partners before you’re ready to sell, you’ll have plenty of time to get your house in order and weigh all your options. But first, you must answer the call.
Carolyn Armitage is head of Thrivent Advisor Network.