The final phase is preparing the company for
the sale. This takes a considerable amount of time and requires
a lot of outside help. You'll require the services of different
specialists, such as your accountant, attorney and a merger
and acquisitions firm. Much time and effort will be spent by
all parties involved to make sure you are well represented.
An essential part of this phase is to prepare
a business plan that will present the company in its most favorable
light. A good business plan will include :
- A market analysis
- Your market position and competition
- A breakdown of your business by product lines
or by distribution
- A profile of the type of customers you have
- An analysis of customers and an indication
of their importance / value to the company
- Financial statements
- A plan for future growth
Only after the business plan is ready should
you decide on a selling price. A mergers and acquisitions firm
can help you set a realistic figure, which might be higher than
you had anticipated!
A mergers and acquisitions specialist will help
you analyze the variables. The price will be based on a number
of formulas, such as price earnings, dollars to sales, net worth
and valuation of assets.
Hard numbers will have to be adjusted to show
assets that may not be reflected in your financial statements.
One rule of thumb is to estimate what it could
cost a prospective buyer to duplicate your business. If your
price far exceeds this cost, it would make more sense for the
buyer to start from scratch. In effect, there is a time value
of money and risk.
