Business owners are approached every day by new companies selling their products or services. It can be exhausting.
M&A firms are some of the most aggressive at marketing to business owners. These firms usually withhold their most valuable advice unless you’re prepared to hire them. That isn’t helpful if you’re waiting for economic conditions or business results to improve before you’re ready to sell.
ASG Partners is a different kind of firm. We’re so confident in our ability to sell companies – when you’re ready – that we’re happy to give away all kinds of free advice. So, here are four tips to help you plan for your eventual retirement.
- Ground your valuation in reality. Make sure you understand the current value of your company and, more importantly, how your financial and operating metrics need to look to meet your valuation goals. Otherwise, when this economic cycle turns around, you might be surprised to learn that your company isn’t as valuable as you need it to be.
- Plan for your succession. Many successful businesses are a testament to the strengths of their owners, but when the time comes to sell, the owner’s role in daily operations becomes a liability. Succession planning takes time, so start working yourself out of a job, building a management team, and delegating your most important responsibilities to others.
- Clean up your financials. Your financial statements tell the story of your business, and they will take on new importance during a sale. Engage your CPA to help assess your accounting practices and ensure they can stand up to outside scrutiny. You’ll want 2-3 years of “clean” financials when you start the sale process, so it’s not too early to start this effort.
- Assemble a team you trust. In addition to your CPA, you’ll need an experienced transaction attorney to help with the sale and a wealth manager to help manage your investments after a significant liquidity event. If you don’t already have those relationships, now is a great time to start building them – especially since your team members will help you make decisions during the largest financial transaction of your life.
If your business is performing well despite economic uncertainty, it might be more valuable now than ever. Otherwise, this is a great time to build future value. If you’d like to learn more, please contact us.