Housing Sales are Hot, but is this Also a Good Time to Sell a Business?

There’s no doubt about it. We are in a very hot housing market, but is it a
good time to sell a business? Most indicators point to an attractive business
sales market as well. After months of operating in a “wait and see mode,”
many private equity groups and investors are ready to spend. Not only is
there pent-up demand, but potential buyers are eager to take advantage of
low-interest rates. This combination may make this a great time to sell your
company.
However, market conditions are only one reason to sell a business. But if the
hot market has made you think about putting your firm up for sale, you’ll
need to prep to get the best offers possible.
The sale price of your organization can vary based on a range of factors.
When buyers evaluate a firm, they want to see a productive culture. A strong
company must have sustainable systems in place. Buyers are also interested
in the history of expansions, if there are multiple locations, the possibilities
of franchises, or the presence of affiliate programs. And, of course, a
business needs to demonstrate a history of steady or growing sales. 

When You’re Getting Ready to Sell, You are in
Stage 6: the Salability Stage

Stage 6 of Business Success is the Salability Stage. If you have taken your
firm through Stages 1-5, you are in a great position to get the maximum
asking price. However, if you’re unsure where you are in the business
development cycle, you may want to revisit the goals and strategies for
Stages 1-5 in my bestselling book) .
Stage 6 firms are reliable money-makers and don’t need personal passion
and drive to continue to generate revenue.
But being in Stage 6 does not necessarily mean that your organization
attracts a great asking price. If you intend to sell in the coming months or
even a few years from now, you may still have some work to do to ensure
that investors and buyers make great offers.


Get a Professional Business Valuation Early


A professional valuation helps identify the cosmetic upgrades needed to
increase company value. Get it early in the process, well before you solicit offers. The valuation should include an exhaustive analysis of your business
and encompass the value of everything in your inventory.
Once the valuation is completed, you can address any issues identified in
ways that increase the assessment. It should also help you avoid spending
money on parts of the business that won’t add to the selling price. Best of
all, once you have completed a professional valuation, it’s easier to
recognize a good offer when it comes your way.


This is Not the Time for Big Improvements


Avoid a company overhaul. While it may be tempting to dress up the firm, at
the end of the day, you’re selling the predictability of future revenue. Solid
systems and controls should be driving the business. So, make sure you
retain key hires and keep core competencies in place. It’s okay to make the
firm look slightly better, but this isn’t time to mess with the magic that got
you this far.
An office remodel or a logo upgrade are easy changes. These kinds of
cosmetic upgrades can make your company a bit more attractive to sellers.
In addition, by upgrading things such as package design, the building facade,
and marketing materials, you add a little credibility to the success of your
organization. But again, this isn’t the time to mess with systems or controls
or move critical employees. 


Organize Your Financials


When you’re getting ready to sell, make sure your P&L is attractive,
organized, and easy to review. Buyers will request a financial audit before
completing any business purchase. You may also want to improve your
company credit and reduce financial liabilities. With a strong P&L statement,
excellent credit, and minimal liabilities, your firm will be more attractive to a
broader range of buyers.


Need Help Prepping for Sale?


While this is an excellent time to sell a business, getting ready to sell can be
complicated. Mistakes can cost you millions. So, if you’re thinking about
getting your business prepared for sale this year or in ten years, let 7 Stage
Advisors help. Email me at [email protected], and let’s talk about how
you can get your business ready for a fantastic offer.