The Right Timeframe for Preparing a Company for Acquistion.

Countless business owners normally put their blood, sweat and tears into a business over quite a few years with the hope of providing a nice lifestyle for their family members and one day retiring on the heels of selling their company. Tens of thousands of business owners will make the decision to sell this year. Unfortunately, a great number of business owners will be behind the proverbial eight-ball if succession planning enters their thoughts for the very first time at the moment they decide to sell. In fact, owners ought to start planning their exit from the first day of operations. Five years ahead of the sale is the second best response as it will give owners the time needed to bring their business to a valuation level necessary to achieve their retirement goals. At the very minimum, business owners need to think about their business exit planning three years before they want to sell. Many owners have no concept as to the appropriate time to sell their company. The answer to this may come in the form of one’s retirement goals or requirements. This is exactly where a good certified financial planner can be of assistance. They can help an owner establish how much money is desired out of the sale of their business in order to attain their desired goals. After meeting with a certified financial planner, the next logical step is to figure out the existing value of the business. This is where a professional business broker can be of tremendous benefit to an owner. Most business brokers are pleased to sit down with an owner and perform a business valuation. Our business brokerage firm, which is located in West Chester Pennsylvania just outside of Philadelphia, does free valuations or “opinions of value” all of the time. If a company is valued at the price that accomplishes the owner’s desired goals, then they may be prepared to sell straight away. If the value is lower than what is necessary, then the owner has to be of a mindset for raising the price tag of their company and taking steps to make sure that comes about. One item that business owners really should have in order before they sell is the business books and records. Prospective buyers and banks will want to see at least three years of books and records. Appropriate and accurate books and records instill assurance in both a buyer and the bank. At the very least, a business owner should have current and accurate profit and loss statements, balance sheets and tax returns over the prior three years. In conclusion, owners ought to be thinking about their exit strategy way in advance of their actual anticipated selling date. The sooner business owners think about exit planning the better. Business owners ought to think about an exit planning strategy from the very first day of operations, if not at least 5 years before they want to sell and at minimum 3 years before they want to sell. It is quite important to have real books and records for at least three years prior to selling. Owners really should align themselves with the appropriate experts to help in what could possibly be the most critical sale of their lives; a business broker, certified financial planner, business lawyer and accountant are instrumental in assisting owners with successfully exiting their business.

If you would like to read more about the procedure of selling or buying a business, please take a look at Business Broker Blog. If you would like to speak to a business broker about selling your business, please visit the author's Business Broker Webpage.