At AcquisitionHub we talk with a number of owners looking to sell every week.
Despite all the great information on business exits it’s amazing how unprepared people are.
Regardless of Exit-Readiness they usually call us for ONE reason. From a health scare, to financial difficulties to retirement – there is a catalyst at play. They NEED to sell.
But NEEDING to sell has no correlation to whether you CAN sell. Wish it did, but it doesn’t.
Just because the need arises for you doesn’t mean the market will reciprocate that need.
Most don’t realize but 4 out of every 5 businesses that are listed don’t sell.
Yet everyone believes they will get a deal. An 80% failure rate is far from a pass mark.
And even if you do manage to find a buyer, the deal put forward is often below any preconceived expectations.
It’s frustrating – because there are different decisions that could have been made along the way which could have altered the outcome.
At the AcquisitionHub we stand by the principle that in order for an Exit to take shape and a deal negotiated, you need time and a compelling reason to reach out to the right buyer.
Does your business generate good returns? Does it have the potential to grow?
If you want to sell you probably should have started planning more than 2 years back. Most companies would greatly benefit from a focused exit strategy even if the owner is not ready to let go.
Because fundamentally if the business is operating in a sale ready state, it is going to be well optimized, profitable and de-risked. All the hallmarks of an attractive asset.
So if the idea to sell pops into your head, you need to second guess yourself and ask, am I really ready to sell or do I just want this business off my plate.
If its the latter you will encounter too many hurdles. So to change your perspective on selling, here are three ideas worth digesting.
Value-to-You vs Value-Someone-Else
Your business likely has a lot more financial firepower than you believe. When you have the right team behind you can and should be able to dramatically increase the value of your business.
The amount of times I hear – we don’t do any marketing and I do most of the selling is problematic. Not a badge of honor.
Marketing, demand generation and developing a proper sales system is an opportunity to expand the business well beyond where it is right now. By making this investment you will be shocked at the growth and returns you can achieve.
The sooner you start the more progress and results you will achieve.
This will create massive value for a buyer.
Get Out of the Driver’s Seat
People often associate selling as the end. It doesn’t have to be this way.
Many owners are simply tired from running their business. Chasing opportunity after opportunity ends up being exhausting after a while, especially if you are the one directing traffic all the time.
One of the strategies we look to employ for people is a partial sale or selling down equity to a new investor that brings more value to the table than you ever could. You take some money off the table and let the buyer drive growth. You become the passenger before you step out completely.
The new co-owner’s aim is to grow the business to the next level. That often involves hiring the right talent, investing in technology and opening more sales channels than before. The returns from a properly scaled business with the right infrastructure can be amazing, 10%,15%, even 30%.
Savvy acquirers know that company sizes have a huge influence on valuations. The bigger the organization the less risky the earnings and even larger acquirers come knocking – paying higher multiples.
A second bite of the apple tastes even sweeter.
Why must you exit?
When it’s done right the compounding benefits of a well run business will always multiply.
Then, if an Exit is executed the right way, the whole experience becomes life changing.
Liquidity is the biggest challenge for any small business. You literally have your life savings tied up in the business.
You can talk about optimizing profit, working capital and cash flow all day long – but nothing beats that feeling of getting 3, 4, 5 or 7 times your money in one go.
This only happens when you Exit. And you have to go through the entire Exit Process and see it through.
If you want to take a closer look at your situation we invite you to get in contact with us as soon as the idea to sell pops in your head.
We can evaluate your business, put your options on the table and help you Maximize Value.
Is Your Business Exit Ready?
Find out in 5 minutes with our Exit Value Scorecard