How to Sell Your Business for the Maximum Price in 2021
(Whether you did good or bad in Covid)
You’ve been working your butt off for years, and now you’re ready to sell. You want the best price, so you need to understand what buyers are looking for in a purchase. Here’s how to make sure they’ll want yours!
1) Ensure that your company is profitable by 2021 by retaining a Broker to help you “recast” the numbers. This means not only increasing revenue but also decreasing costs as much as possible through efficiency and innovation. It also means hiring a broker to do a true valuation or estimate of value for you. The tax return “profits” are NOT the true EBITDA!
2) Ensure that your company has an exclusive technology, product, or service, or at least one that appears to be exclusive in the eyes of buyers. Buyers are looking for reasons why they should pay more for your firm than any other potential buyer might. Your price must be justified.
3) Ensure that you have a concrete exit strategy in place by 2021 for whatever year you think you want to sell. Having an exit strategy NOW and a plan in place is imperative if you think you might sell in the next 5 years. You must decide now—not in three months, not next year—what you will do with the proceeds of selling your business, how much time off you will take and where you’ll go on that vacation, what new career path you’re going to take, etc.
4) Ensure that you have a consistent and defensible records. Your broker can help you with this. You must be able to demonstrate that your company is not going to stop growing on its own in the next few years. Buyers want to see organic growth—not the kind where you just hung out a shingle and got lucky!
5) Ensure that you have adequate cash flow to operate the business for 2-3 months post-closing. A broker and banker can help with this transition. This will help smooth your transition to new ownership and also entice buyers who, after all, want a steady revenue stream over time.
6) Ensure that you are proactive in telling potential buyers that the company is available for sale by 2021. Potential buyers will not come knocking on your door unless you tell them that the company is for sale. The best way to accommodate this is through a Broker.
7) Ensure that you are diligent about managing all relationships with customers and prospects by 2021, and especially your top 50 clients or prospects. This means not only maintaining contact but also asking for their business from time to time in an interesting way so that they’ll remember you. You must also be sure to treat all of your contacts with equal importance and keep them up-to-date on what’s going on in the company. If you just send out a mass email or birthday card but haven’t talked to any individual in ages, they probably won’t remember who you are! This type of activity will impress buyers knowing there is a relationship with the company.
8) Ensure that you have continued to expand your network by 2021. You should be making new contacts in person and online on a regular basis, inviting them to events or social gatherings, checking in with old contacts regularly, and nurturing all relationships so that they can help you find business when the time is right for both of you. Always continue to grow your business, even through the sale process.
