Selling your business has been on your mind; you’ve defined your goals and sought counsel from an expert. Now you’re ready for the next steps.
The experts at The Vernon Company guide the way:
1. Invest in an audit.
Any company interested in acquiring your firm will want to see a certified audit of your business. Numbers you should know include the overall cost of goods sold, expenses, gross profit, etc. If you have a P&L, familiarize yourself with the last three years of data.
2. Consider your customers.
Who is buying from you today, and why do they buy from you? How would your customers be impacted if you were to make a change in the next six months to a year? You want to make sure that any transition you make means they’ll still get great service. In addition, decide if you still want to be involved in the business and, if so, as an employee or as an independent contractor. You may still be the point person for your clients and your decision might potentially present them with more services and products.
3. Be willing to listen.
Get input from others who have sold their business. Like selling your house and having to paint a few walls to get it ready to show, you may need to make a few tweaks to the business to make it more attractive to potential buyers. This may be as simple as organizing your files and stockroom, or more involved, such as having an accounting professional assist in gathering documentation. Be ready to show your marketing collateral, financials, case histories, client profiles, etc. Ask those with experience how they prepared and what they wish someone had told them beforehand.
4. Research your options.
Take a look at the industry – who is acquiring businesses in the industry? Consider both local and national companies. Make sure that anyone you consider partnering with in the future has a culture similar to yours. It should be a good fit. Also exercise your due diligence when it comes to a suitor’s financial stability. Some of the most pressing reasons distributors decide to sell their businesses are the need to finance larger orders, manage clients’ bad debt or have flexible billing options. Technology matters too, as do marketing tools and artwork services. Ask what benefits the buyer would bring to the table.
5. Discuss the transition. Ask a buyer how the transition would be managed. Will their management be easily accessible throughout the process, and will in-house customer service make order processing smooth from the start? How will your clients learn of the change? How will your company be integrated with their technology platform? Make a list of your questions. A strong buyer will be prepared to answer with a well thought-out plan.
Once you think through this list of 10 steps, you should be ready to begin your journey. Insights come from the team at The Vernon Company, founded in 1902. It employs over 265 account executives, 135 administration and production employees and serves more than 25,000 customers from its Newton, IA, corporate headquarters. To learn more, visit www.lovevernon.com.