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Is it too late?

John Kielich, Managing Director of Kolb+Co. M&A Advisers   email | bio 
LeAnne Foster, Senior Associate for Kolb+Co. M&A Advisers   email
July 2010

If there is one thing that business owners hear when they begin preparing to sell a business, it's that it takes time, and if you don't take the time, you will not get the best price possible. So, is it too late to sell your business this year? If you are reading this article and have not started the process, the answer is probably yes. However, because there are so many motivators, factors and options for completing a transaction, the only way to know for sure is to ask an M&A (Merger & Acquisition) adviser.

First, let's clarify the role of an M&A adviser: they are the catalyst for your transaction. Choosing the correct adviser can make quite a difference in the success of your transaction timeline and the bottom line. An M&A adviser seeks to learn about your business in order to give you the best advice and feedback from a number of different perspectives. High-quality M&A advisers have been in the shoes of buyers and sellers, managed other transactions and understand the viewpoints of the other advisers involved (bankers, lawyers, accountants, etc.).

In order to put this knowledge base to work for you and your transaction, and to find out how quickly a sale could happen, your adviser is going to need to get an understanding of your situation:

• Why do you want to sell? What is the motivation and how does that affect your timeline? Viable, easy-to-sell reasons are typically retirement, burnout, divorce, partner issues, health problems or other business interests. You should also be able to articulate what your plans are for after the sale. This indicates that you've thought about your decision and are truly ready to pull the trigger.
   
• Is your company growing? Do your financial statements support your answer and are your financial forecasts achievable? Obviously, the more poised your company is for growth, the more attractive it will be to buyers. Taking into account the past years' economic patterns, financial statements may be less indicative of the future but still important.
   
•  What are the best features of your business? What are the less-than-desirable features? You know your business inside and out. If you are honest about both the positive and negative qualities of your business with your advisers, they will be better equipped to position your business in the market and negotiate with buyers.
   
• What do you want your business to sell for? The answer to this question will help advisers understand what your goal is and they will provide feedback about your expectations and timeline and get everyone on the same page from the start.
   
• Are all shareholders/stakeholders committed to selling the business? Gaining consensus from a group for any decision is difficult; knowing that everyone involved is on board shrinks the timeline. However, it is also helpful to confirm that this same group is realistic about the value of the company and agrees on the deal structure.
   
• Would you consider selling a portion of your business? Being open to having a continued invested interest in your business is attractive to buyers because it aligns your goals and ensures that you believe in the future of the company.
   
• Who are the key management personnel? Are they committed to staying after closing? The saying, "knowledge is power," may be cliché, but is extremely pertinent in transactions. Key management that are integral to the success of your business and know how to grow your business are an invaluable part of your growth plan.

There is a litany of further questions that help advisers understand your business and the factors surrounding its sale. The questions listed above are a good start to determining how far away you truly are from successfully completing a transaction.