MAXIMIZE YOUR COMPANY'S SALE PRICE

Despite economic slowdown, mergers and acquisitions remain active. Many factors continue to contribute towards a robust mergers and acquisitions environment, low interest rates, availability of funds from equity markets, also from corporate and individual investors. During the last two years we set new records in numbers and dollar values, in a slower economic times it might slow down some, but it is likely to continue to be active.
There are several factors that will effect the value of your business, some are obvious, but many we often miss. If you want to get ready to sell your business, below are ten thing that your can do which will enhance the value of your company.

1. Financial Statements: Your financial statements will determine the significant part of the value of your business. Your statements are likely prepared to minimize your taxes. You may want to let your reporting enhance the value of your company. Monitor your financial measurements and ratios, specially your receivables aging and your inventory turnover. Improve and better organize your record keeping, use monthly and annual performance targets and budgets to measure your performance. Make sure your CPA is preparing your statements with the expectation of going through the scrutiny of a full audit.
2. Management Team:  Your management team is the business, hire and keep top quality employees, consider signing long term employment contracts with your key people. Your business will likely to be worth less without them.
3. Timing matters:  Business growth is cashable, your business is worth more when your company and your industry are in a growth phase. Although potential is usually not readily bankable, recent revenue and profit growth will help the potential buyer expect the trend to continue.
4. Organization & Appearance: Attractive Packaging sells, invest in your company’s appearance and internal organization. Besides helping boost moral of your employees and improve their productivity, it also increases the value of your business.
5. Legal issues: All buyers will expect to be kept harmless from known and unkown liabilities prior to their purchase. In most cases you will end up dealing with the consequences before or after the sale. It usually is less costly and easier to resolve them before you start your sales negotiations.
6. Continue to manage your business well: If you are about to sell your business you should try to keep your sales and profits high, even if it requires additional capital investment. The sales process can be long and treacherous; declining sales and profits could break the deal or invite the buyer to ask for price adjustment. Maintain discipline, run your business as tough you are keeping it, besides being good business, consider the possibility that the sales might not close.
7. Taxes: In any sales transaction it is not how much you get for your business, but how much you keep. Your tax council and your estate planner need to review your options to minimize your tax obligations. Your intermediary or investment banker should work closely with your tax attorney to develop a transaction that will minimize your capital gains and estate tax obligations.
8. Company assets: Many businesses have assets in the form of machinery, equipment and real estate that do are not being used in the operations of the business or are not essential. To maximize the proceeds from the sale of your business you may consider selling these assets separately.
9. Confidentiality:  All sales negotiations and all sales agreements will not close. The deals that will close will take from several months to a year or more. Consider the morale of your employees, and the anxiety of your vendors, creditors and customers, it is to your benefit and the benefit of your buyer to keep all negotiations strictly confidential. Only the individuals that are involved in the negotiation process need to know, have a legally binding confidentiality agreements signed by all involved individuals.
10. Your intermediary:  It is likely that you will sell your business with the help of an intermediary, a consultant, a business broker or an investment banker. A good intermediary will add value to the transaction and value to your business. Be the coordinator of your team, your intermediary, your CPA, your tax and business attorneys. A well working team will help you consummate the deal, and derive the maximum dollar at the close. You are expected to show leadership and decisiveness to move along the project. Maintain positive expectation and a sense of urgency about consummating the transaction, specially when you are dealing with obstacles to closing the sale.