Once a sales process begins your company will naturally come under immediate and increasingly intense scrutiny. That scrutiny could certainly affect any headline valuation previously placed on your business.
The principle areas to be examined will be the company’s management, in conjunction with your systems. Both of these areas should be a selling or value point to an acquirer, however neither of these vital components can be “fixed” at the time of sale, and so it is well worthwhile considering advance planning in these areas.
Here are some thoughts on how you can demonstrate a robust and sustainable structure in your business:
Ensure that your operational and financial systems are really adding value by producing succinct, relevant and meaningful reports to management, which enable them to achieve maximum profitability across all areas of your business.
Produce monthly management accounts that cover the important performance indicators within your business. These should not only enable you to track your business on an ongoing basis, but also clearly demonstrate to potential acquirers (or lenders) that you are in control of your company‘s finances. The management pack may be produced internally, perhaps with the support of an external part time senior financial advisor.
It is advisable to consider genuine succession management at least one to two years prior to sale and/or exit from the business as the acquirer will look beyond the departing shareholders. This management should be capable of maintaining and building on customer and supplier relationships, as well as running the operational and financial side of the day to day business.