Preparing for an Exit - Take the Value Creation Assessment TM

 [Editor’s Note: Many business owners are busy running the business and do not take the time to prepare for an exit. Often, they do not even think about it until they receive an unsolicited offer from a prospective buyer. Business owners who have prepared for an eventual exit typically have a smoother transition and receive a higher value for the business. - dpm]

Preparing for an Exit - Take the Value Creation Assessment TM

An offer comes out of the blue. A company in your industry, whom you may have known for years, contacts you with an offer to buy your business and states that they can close in 30 to 60 days. What's next?

If it seems too good to be true, it likely is. History tells us that "one buyer offers" with promises of a fast close - for a company that was not prepared -wind up stretching out for many months, often with changes in the purchase price offer, and consuming lots of the seller's time and resources - only to end in a broken deal. Or...the offer is significantly less than the seller could realize with additional prospective buyers.

Businesses can operate for many years in a somewhat informal manner with handshake agreements, employees with tribal knowledge of process, etc. Many business owners are surprised when they learn that you can't sell an "informally run" business for a premium price.

What determines the value of a business... to others?

• Solid performance history.
• History of improving revenue and cash flow.
• Capable management team.
• Strategic growth opportunities.
• Documented repeatable processes.
• No "gotchas" (no surprises during due diligence).

Surprises will cost you. Buyers hate surprises. When a buyer discovers something during due diligence (issues with financials, issues with customers or suppliers, issues with employees, etc.), it causes them to look deeper, wondering what else they might discover that was not disclosed. This potentially breeds distrust and often results in a change to the offering price.

Identifying and resolving issues in advance saves money, time, and leads to a cleaner, more productive transaction. Identifying potential issues in advance allows the company time to resolve them over time, at lower cost...and a lot less stress. For example, it can take time to clean up contracts with customers and suppliers, resolve issues with financial statements, etc.

We can help. Take the Value Creation Assessment TM. For over two decades, The Mead Consulting Group has been working with companies to assess their preparation for a potential sale, identify issues and recommend corrective actions. Investment bankers and buyers have remarked that companies that have gone through this process are the best prepared that they've worked with. We help companies routinely go through this assessment in several days. Then they can be armed with detailed action plans to be best prepared.

For more information on the process to unlock maximum value, please contact me at meaddp@meadconsultinggroup.com or (303)660-8135.

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