How To Confidently Retire From Your Business

Start With Your Presale To-Do List

Business owners, does this sound familiar? Are you considering retiring from your business but don’t know where to start? You want to protect the investment you’ve made in your company, but you fear the pitfalls many business owners fall into when attempting to exit their business.

If you can relate, let me shed some light on something you can do today to prepare. Begin the planning process now. It leads to a higher valuation, makes the process easier, and allows you to sell the company when you are ready.

Focus your considerations on the right time to sell, with two thoughts in mind: (1) it is always best to avoid letting events dictate when you must sell, and (2) be prepared and ready to execute if an excellent opportunity arises.

The events triggering a sale can be a combination of market and personal conditions, such as a highly favorable offer or a generational change in the business. But at the end of the day, you should always regard the possibility of a sale as one of your alternatives and be prepared by making sure everything you do generates and creates shareholder value whether you are selling or not.

Seven-Part Presale Checkup

Early preparation for sale begins with a presale checkup, sometimes referred to as sell-side due diligence, followed by corrective actions.

The checkup is a diagnostic overview undertaken before the sale that pinpoints the areas to prepare for a sale. For instance – Are information systems robust enough? How strong is your management team, and how capable is it of running the business without you? What is the status of company assets? What is the situation regarding relationships with customers?

Moreover, what improvements can be made today that a new buyer will appreciate and want to pay a premium for? This diagnostic sets the stage for sale on a broad level by taking initial actions and adopting a market-ready mindset. Later, closer to the time of sale, due diligence drives this foundational thinking into the details that both the buyer and seller need to know to complete an effective transaction.

Prepare Your Presale To-Do List 

Part 1: Legal Conditions

Clear ownership of assets

Long-term, transferable leases

Nonliens/claims, encumbrances

No pending litigation/labor issues/law violations

Up-to-date licenses

No zoning issues

Part 2: Financial Conditions

Increasing revenues

Increasing profits

Positive cash flow

Taxes paid to date

Current debt payments

Current receivables

Professionally produced financial statements

Part 3: Business Image

Trademarked name

Reputable image

Quality advertising

Website/online presence

Business location and interior

Signage

Publicity offline and online

Networks/associations

Word of mouth

Part 4: Business Operations & Organization

Equipment

Established, trained staff

Well-documented operations and systems

Profitable business model

Key employees with transferable employment contracts

Part 5: Products

Distinct, competitive products

Distinct, competitive services

Packaging/product presentation

Proprietary production process

Part 6: Clientele

Long-term, frequent customers

Long-term client contracts

Many vs. a few customers

Loyal clientele

Part 7: Transferability

East-to-transfer clientele

Easy-to-adopt systems

Long-term transferable leases

Do one thing: Complete the seven-part presale checkup to identify improvements for which a new buyer will appreciate and want to pay a premium. Begin making improvements today.