Maximise your business value, before it’s time to sell

When I talk to peo­ple about sell­ing their busi­ness, every­one wants to max­imise the amount of money they receive. Unfor­tu­nately if you are try­ing to max­imise value when sell­ing, you’re too late.

I think the quote by War­ren Buf­fett above explains it best. Value is what the pur­chaser gets. What does that mean? It means that depend­ing on who the pur­chaser is, they may get dif­fer­ent value. For exam­ple, sell­ing a small lawn care fran­chise to a global account­ing firm has rel­a­tively lit­tle value. How­ever, a larger lawn care provider in the same area may receive con­sid­er­ably more value in the same purchase.

So, under­stand­ing that con­cept, it makes sense that try­ing to max­imise value at the last minute is a fruit­less endeav­our. Max­imis­ing value in any real way requires plan­ning from the start, well before you intend to sell your business.

From the start, under­stand your exit strat­egy. Con­sider whether sell­ing to a strate­gic buyer is your strat­egy, and who that strate­gic buyer is likely to be. It’s not some­thing that peo­ple usu­ally do, but it is some­thing that’s extremely important.