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Sell Your Business - 10 Keys to Succes

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Information about Sell Your Business - 10 Keys to Succes
Business-Finance

Published on December 27, 2008

Author: davekauppi

Source: authorstream.com

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Sell Your Business – 10 Keys to a Successful Exit : Sell Your Business – 10 Keys to a Successful Exit THE EXIT STRATEGIST Do Not Wait Too Long : Do Not Wait Too Long Ever hear, “I sold too early.” Rapid erosion in business value during the final year of ownership Usually a reactive and not a proactive decision – start thinking proactive Exit from a position of strength Let a good sale agreement reward you for that next big deal Be Prepared Personally : Be Prepared Personally We plan vacations, parties – plan your business sale and how you will spend your time Travel, hobbies, volunteer work, a job I do part time for pleasure not money Where would you want to live – full time or during the winter months It is so important to establish an identity for yourself outside of your business – think Nobel Prize Prepare Your Business for Sale : Prepare Your Business for Sale Do it by the numbers – hire a CPA firm to do your financial reporting Reduce Customer Concentration Delegate and Develop Identify your growth opportunities and put them down on paper Keep Your Eye on the Ball : Keep Your Eye on the Ball Running a business is a full time job Selling a business is a full time job Must remain totally confidential until the last minute If the owner tries to sell, everyone gets nervous except competitors Get Multiple Buyers Interested : Get Multiple Buyers Interested Typical start of the process is an unsolicited approach A competitor is an opportunistic buyer and is trying to get a bargain If M&A firm is engaged the original offer is almost always improved by on average 20% Owner initiates sale through banker, lawyer or accountant – result is an auction on ONE Hire a Merger Acquisition Firm : Hire a Merger Acquisition Firm I risk sounding self serving, but…… Large public company wouldn’t consider any other way – Why? For Seller usually a once in a lifetime event. For Buyers, one of many. Need to Balance the M&A team from the Buyer and Seller Engage Other Professionals Familiar with Business Sales : Engage Other Professionals Familiar with Business Sales Bookkeeper vs. CPA – huge impact of tax issues Stock Sale vs. Asset Sale Capital Gains and purchase price allocation Deal attorney vs. Business Law and every day attorney Be Reasonable on Sale Price and Terms : Be Reasonable on Sale Price and Terms Irrational Exuberance is over Rules of Thumb – generally range of values for similar business Our goal – get you to the top of the range “Detail” your business for sale Disclose, Disclose, Disclose – and Do It Early in the Process : Disclose, Disclose, Disclose – and Do It Early in the Process A minor negative revealed early is an inconvenience or negotiation point – revealed late it can be a deal breaker No contract can cover everything – there must be trust Smart buyers - reps and warranties Be Flexible and Open to Creative Structure : Be Flexible and Open to Creative Structure Gross purchase price up – cash at close down Seller Note is the rule rather than the exception. Length, rate, balloon Look at after tax proceeds – normally expect higher price for an asset sale. CONTACT INFORMATION : CONTACT INFORMATION Dave Kauppi President MIDMARKET CAPITAL, INC. ph (630)325-0123 fax (630)325-9879 cell (630)215-3994 davekauppi@midmarkcap.com www.midmarkcap.com THE EXIT STRATEGIST NEWSLETTER www.midmarkcap.com/exit THE EXIT STRATEGIST

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