It was nearly 20 years ago when I first approached this topic, something just about every consultant on the planet has an opinion about. While we’ve helped a fair number of privately owned companies get sold, I’m not here to tell you if or when you should sell your business. But what I can tell you is the characteristics I think your business needs to demonstrate to get the highest price possible. It’s a short but important list.
- Is your business producing positive cash flow? If it’s not making money, your selling price just dropped through the floor.
- Does the business have growth potential? Your buyer doesn’t want to pay for your past success, they want to buy a way to their own future success.
- Is the business “clean”? This has to do with good accounting and reporting, a clean tax record, no contingencies hiding in the closet.
- Is the timing right? Are you selling because it’s going downhill and you want to jump before it drops further? Fageddaboutit! Fix it first.
- Are your expectations reasonable? Given your answers to the first 4 questions, are you expecting a fair price or a pie-in-the-sky one?
I could write a book on each of the questions above, but you get the point. If you’re not sure, or if you’re good for 4 out of 5, get an outside opinion from someone in the business – an investment banker, a business broker, or Your CFO for Rent. We’ve been there and we’ve helped get it done. But whoever you ask, be prepared to listen. They’re going to tell you a few things you don’t want to hear, but you should hear it before some potential buyer does.
