seven steps to selling your business

02/14/12 1

Seven Steps to Selling Your

Business In A Tough Market!

Presentation by:

Larry GreeneMercury Business Brokerage

Mercury Business Brokerage 2

Introduction

• Purpose of this presentation

– Objective:

• Review the preparation steps required for a successful business sale

– Outcome:

• Know how your business must appear to attract qualified Buyers


Steps to Freedom

1. Commitment

2. Financial Housekeeping

3. Lower Overhead

4. Get Lean and Mean

5. Paint Up / Fix Up

6. Build a Team

7. Tax Planning


Step 1: Committment

• Are you ready to let go?– Are there family members involved?

– Is your spouse ready for a change?

– Seek agreement from these stakeholders

• Plan for the future– What are you going to do next?

• Are you financially prepared?


Step 2: Financial Housekeeping

• Income Statement (P&L)

• Is Uncle George still on the payroll?

• Is the business still paying for the vacation home?

• Personal cars

• Family members cars

• Personal credit cards



• Income Statement (P&L)

– All businesses have these ‘discretionary items’ on the income statement

– Remove them or categorize them so that they are easy to identify

– Make sure the P&L is ‘clean’



• Balance Sheet– Make sure all business assets are included

– Remove all items that are personal assets

– Remove old items that are no longer used in the business

– Remove personal loans or ‘Loans to Shareholder’

– All financial statements should be transparent

– Don’t make the Buyer guess what is included


Step 3: Lower Overhead

• Two highest costs are labor and rent

• Review your operation with a critical eye

• Has your staff gotten ‘fat’?

• Reduce payroll in all areas possible

• Can technology replace labor?

• Can you outsource certain tasks at lower cost?


Step 3: Lower Overhead

• Sublease excess space

• Move to location that better fits your needs

• Renegotiate your lease

– Obtain longer term if location is important

– Additional Lease Option for extra years

– Necessary to have minimum 10 years for SBA loan


Step 4: Get Lean and Mean

• Is your sales staff still selling?

– This is an area that becomes lax most often

– Review sales salaries/commissions

• Cross-train staff members to be more efficient

• A Buyer won’t accept that you ‘really don’t need’ certain staff

• Review processes to remove unnecessary operational steps


Step 4: Get Lean and Mean

• Lower Cost of Goods

– Renegotiate with suppliers for better prices

– Outsource low margin products/services

• Review contracts with customers and suppliers

• Supplier policies may have changed to your benefit

• Shop liability and health insurance policies for competitiveness


Step 5: Paint Up / Fix Up

• Remove all old debris from storage and plant

• Remove unused manufacturing equipment

• Sell or donate unused office furniture

• Paint offices

• Update signage

• Update collateral material


Step 6: Build a Team

• Choose your Professional Team

– Certified Business Intermediary (CBI)

– Transaction attorney

– Transaction Certified Public Accountant

– Financial Planner

– Insurance Broker


Step 6: Build a Team

• Have a professional valuation performed by a Certified valuation expert

• Get an equipment appraisal done by a Certified Equipment Appraiser

• Discuss typical acquisition scenarios with your Professional Team


Step 7: Tax Planning

• Start a discussion with a tax expert about the sale of your business

• Stock sale or asset sale?

• All cash or seller finance?

• Start a discussion with your financial planner about handling proceeds from the business sale

• Not all accountants and attorneys are expert in business sales transactions


Summary

• Make a commitment• Start early

– Don’t wait until you are ready to sell

– Time on the market varies, typical 9 to 15 months

• Clean up everything– Financials

– Staff

– Office / Plant

• Find out what your business is worth• Plan ahead to pay less taxes upon sale• Then, go to market


The Big Payoff

For Every Extra Dollar

You Add To Your Bottom Line The Value Of Your Business

May Increase ByThree Dollars

Larry Greene, CBIMercury Business Brokerage

Phone (714) 813-0581Email: [email protected] 18

Business Resource Group

Thank You for attending our Business Workshop!

All information we learn about your business at this workshop is strictly

confidential.

seven steps to selling your business

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