Scale Your BusinessGrowth StrategyHow to Prepare Your Business for Acquisition

How to Prepare Your Business for Acquisition

You worked hard to build a business, and now you are considering moving on. Selling a business is an emotional time for entrepreneurs heavily invested in their companies, yet an acquisition can be a great way to launch your business in its next phase of life with a buyer who shares your values and vision. Find out the right way to prepare your business for acquisition.

Research the Market

How much do you know about your competitors, your market, and the major players who might be buying? Odds are, not as much as you need to know to be a knowledgeable party in the acquisition process. Do your research to find out which companies are looking to buy, who has recently sold a business, and what factors are affecting the market.
By starting with research, you can position your business to sell by taking care of any adverse factors or leveraging positive elements for momentum. For instance, if your neighborhood is seeing a rise in property values, you have an edge by being in a desirable location. If recent sales prices are low, consider what you can do to make your business irresistible to buyers, such as investing in new technology or skills development that turns your customer-service oriented team into rockstars.

Communicate with Partners and Employees

You don’t want your clients and customers to be the last to find out you’re selling the business. Remember, the relationships you worked so hard to build are highly valuable to a buyer. It pays off to retain these relationships through the acquisition process so that the buyer can start off with a secure clientele.

Telling long-term partners ahead of the sale process not only keeps them informed but will help you show a buyer these customers are loyal to the business, no matter who is running it.

The same strategy works for your employees, who may worry about their future if they find out you are selling the business — especially if you were not transparent about things. Communicate openly with employees, show gratitude for their service to your business, and never leave them guessing. Worried employees could get sloppy with work. These mistakes could impact the deal, lower morale, or make you look bad to valuable clients.

Get an Appraisal

A certified appraisal of your business sets your expectations going into the acquisition process and gives you an easy way to tell whether an offer is credible. Look for an appraiser who has demonstrated knowledge of your industry and who can explain the appraisal method used and factors affecting company valuation.

As with research, it pays to do this early. When you have an appraisal, you can evaluate business improvements and how they will affect the appraised value. It may not make sense to repair legacy equipment that has low worth, but it could be a smart move to improve the premises using energy-efficient solutions if the move boosts your value going into a sale.

Demonstrate Your Value

In every stage of the acquisitions process, you want to demonstrate your value. That helps you negotiate from a position of power: When you know what your company is worth, you aren’t going to let someone else define your worth for you.

Rehearse telling your story, drawing on data points and anecdotes. That sets you up for success in business meetings. Review the financials and appraisal, and pick out factors that set you apart from the competition.

As you decide to emphasize strategic points, you also should pick what not to say. Every business has weaknesses, and a smart buyer will pick up on these during their research. You don’t have to show your whole hand.

By understanding the acquisitions process and the rules of the game, you can show off your business to attract interest from potential buyers, sell to someone who understands your company’s worth and move on with the satisfaction of knowing your company is in good hands.

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