Seven Steps To Selling Your Business


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The ABCs of preparing your self and your business for this next big step.

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Seven Steps To Selling Your Business

  1. 1. Seven Steps to Selling Your Business In A Tough Market! 02/14/12 Presentation by: Larry Greene Mercury Business Brokerage
  2. 2. Introduction <ul><li>Purpose of this presentation </li></ul><ul><ul><li>Objective: </li></ul></ul><ul><ul><ul><li>Review the preparation steps required for a successful business sale </li></ul></ul></ul><ul><ul><li>Outcome: </li></ul></ul><ul><ul><ul><li>Know how your business must appear to attract qualified Buyers </li></ul></ul></ul>Mercury Business Brokerage
  3. 3. Steps to Freedom <ul><li>Commitment </li></ul><ul><li>Financial Housekeeping </li></ul><ul><li>Lower Overhead </li></ul><ul><li>Get Lean and Mean </li></ul><ul><li>Paint Up / Fix Up </li></ul><ul><li>Build a Team </li></ul><ul><li>Tax Planning </li></ul>Mercury Business Brokerage
  4. 4. Step 1: Committment <ul><li>Are you ready to let go? </li></ul><ul><ul><li>Are there family members involved? </li></ul></ul><ul><ul><li>Is your spouse ready for a change? </li></ul></ul><ul><ul><li>Seek agreement from these stakeholders </li></ul></ul><ul><li>Plan for the future </li></ul><ul><ul><li>What are you going to do next? </li></ul></ul><ul><li>Are you financially prepared? </li></ul>Mercury Business Brokerage
  5. 5. Step 2: Financial Housekeeping <ul><li>Income Statement (P&L) </li></ul><ul><ul><ul><li>Is Uncle George still on the payroll? </li></ul></ul></ul><ul><ul><ul><li>Is the business still paying for the vacation home? </li></ul></ul></ul><ul><ul><ul><li>Personal cars </li></ul></ul></ul><ul><ul><ul><li>Family members cars </li></ul></ul></ul><ul><ul><ul><li>Personal credit cards </li></ul></ul></ul>Mercury Business Brokerage
  6. 6. Step 2: Financial Housekeeping <ul><li>Income Statement (P&L) </li></ul><ul><ul><li>All businesses have these ‘discretionary items’ on the income statement </li></ul></ul><ul><ul><li>Remove them or categorize them so that they are easy to identify </li></ul></ul><ul><ul><li>Make sure the P&L is ‘clean’ </li></ul></ul>Mercury Business Brokerage
  7. 7. Step 2: Financial Housekeeping <ul><li>Balance Sheet </li></ul><ul><ul><li>Make sure all business assets are included </li></ul></ul><ul><ul><li>Remove all items that are personal assets </li></ul></ul><ul><ul><li>Remove old items that are no longer used in the business </li></ul></ul><ul><ul><li>Remove personal loans or ‘Loans to Shareholder’ </li></ul></ul><ul><ul><li>All financial statements should be transparent </li></ul></ul><ul><ul><li>Don’t make the Buyer guess what is included </li></ul></ul>Mercury Business Brokerage
  8. 8. Step 3: Lower Overhead <ul><li>Two highest costs are labor and rent </li></ul><ul><li>Review your operation with a critical eye </li></ul><ul><li>Has your staff gotten ‘fat’? </li></ul><ul><li>Reduce payroll in all areas possible </li></ul><ul><li>Can technology replace labor? </li></ul><ul><li>Can you outsource certain tasks at lower cost? </li></ul>Mercury Business Brokerage
  9. 9. Step 3: Lower Overhead <ul><li>Sublease excess space </li></ul><ul><li>Move to location that better fits your needs </li></ul><ul><li>Renegotiate your lease </li></ul><ul><ul><li>Obtain longer term if location is important </li></ul></ul><ul><ul><li>Additional Lease Option for extra years </li></ul></ul><ul><ul><li>Necessary to have minimum 10 years for SBA loan </li></ul></ul>Mercury Business Brokerage
  10. 10. Step 4: Get Lean and Mean <ul><li>Is your sales staff still selling? </li></ul><ul><ul><li>This is an area that becomes lax most often </li></ul></ul><ul><ul><li>Review sales salaries/commissions </li></ul></ul><ul><li>Cross-train staff members to be more efficient </li></ul><ul><li>A Buyer won’t accept that you ‘really don’t need’ certain staff </li></ul><ul><li>Review processes to remove unnecessary operational steps </li></ul>Mercury Business Brokerage
  11. 11. Step 4: Get Lean and Mean <ul><li>Lower Cost of Goods </li></ul><ul><ul><li>Renegotiate with suppliers for better prices </li></ul></ul><ul><ul><li>Outsource low margin products/services </li></ul></ul><ul><li>Review contracts with customers and suppliers </li></ul><ul><li>Supplier policies may have changed to your benefit </li></ul><ul><li>Shop liability and health insurance policies for competitiveness </li></ul>Mercury Business Brokerage
  12. 12. Step 5: Paint Up / Fix Up <ul><li>Remove all old debris from storage and plant </li></ul><ul><li>Remove unused manufacturing equipment </li></ul><ul><li>Sell or donate unused office furniture </li></ul><ul><li>Paint offices </li></ul><ul><li>Update signage </li></ul><ul><li>Update collateral material </li></ul>Mercury Business Brokerage
  13. 13. Step 6: Build a Team <ul><li>Choose your Professional Team </li></ul><ul><ul><li>Certified Business Intermediary (CBI) </li></ul></ul><ul><ul><li>Transaction attorney </li></ul></ul><ul><ul><li>Transaction Certified Public Accountant </li></ul></ul><ul><ul><li>Financial Planner </li></ul></ul><ul><ul><li>Insurance Broker </li></ul></ul>Mercury Business Brokerage
  14. 14. Step 6: Build a Team <ul><li>Have a professional valuation performed by a Certified valuation expert </li></ul><ul><li>Get an equipment appraisal done by a Certified Equipment Appraiser </li></ul><ul><li>Discuss typical acquisition scenarios with your Professional Team </li></ul>Mercury Business Brokerage
  15. 15. Step 7: Tax Planning <ul><li>Start a discussion with a tax expert about the sale of your business </li></ul><ul><li>Stock sale or asset sale? </li></ul><ul><li>All cash or seller finance? </li></ul><ul><li>Start a discussion with your financial planner about handling proceeds from the business sale </li></ul><ul><li>Not all accountants and attorneys are expert in business sales transactions </li></ul>Mercury Business Brokerage
  16. 16. Summary <ul><li>Make a commitment </li></ul><ul><li>Start early </li></ul><ul><ul><li>Don’t wait until you are ready to sell </li></ul></ul><ul><ul><li>Time on the market varies, typical 9 to 15 months </li></ul></ul><ul><li>Clean up everything </li></ul><ul><ul><li>Financials </li></ul></ul><ul><ul><li>Staff </li></ul></ul><ul><ul><li>Office / Plant </li></ul></ul><ul><li>Find out what your business is worth </li></ul><ul><li>Plan ahead to pay less taxes upon sale </li></ul><ul><li>Then, go to market </li></ul>Mercury Business Brokerage
  17. 17. The Big Payoff <ul><li>For Every Extra </li></ul><ul><li>Dollar </li></ul><ul><li>You Add To Your Bottom Line The Value Of Your Business May Increase By </li></ul><ul><li>Three Dollars </li></ul>Mercury Business Brokerage
  18. 18. Business Resource Group <ul><li>Thank You for attending our </li></ul><ul><li>Business Workshop! </li></ul><ul><li>All information we learn about your business at this workshop is strictly confidential. </li></ul>Larry Greene, CBI Mercury Business Brokerage Phone (714) 813-0581 Email: