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PKF Texas – Entrepreneur’s Playbook®:Prepping for a Sale

by | Mar 4, 2011 | PKF Texas - The Entrepreneur's Playbook®

Note: Running Fridays in FromGregsHead.comis a continuing series of tips brought to you by Greg Price. These run Sunday evenings during the BusinessMaker’s Radio Show on KPRC 950AM. Audio files can be found on the PKF Texas – Entrepreneur’s Playbook® page of the PKF Texas website.

What a difference a year makes! Remember how you felt this time last year? Unemployment was at record highs, banks seemed reluctant to loan money and a new health care bill was making small business owners feel sick! Fast-forward a year and our clients, as well as our businesses, have weathered the storm. There are still clouds on the horizon and challenges ahead, but they don’t seem as ominous as they did. What are we to make of the current business climate?

In the next 12 to 18 months, we believe activity will increase in the merger and acquisition markets. The climate appears to be ripe for businesses that have strengthened their balance sheet, maintained their profitability, and streamlined their operations to capitalize on available cash and credit. Many companies have received calls from companies looking to enter the Houston market by buying an existing enterprise.

What if you were to get a call asking your interest in selling your business? How would you react?  Make sure to do preliminary work before you go down that path.

  • Design your business to be attractive to a buyer.  Your company is more valuable with a diversified client portfolio and good, up-to-date information systems. Also, the more the business is dependent on you, the owner, the less value it has to a buyer.
  • Meet with a financial planner to see how much money you need to retire. Whether you sell your business or not, you need to know that information.
  • Consider doing a sell-side due diligence project on your business. This will help determine if you are ready to go through the due diligence process a buyer will require.
  • Consider having a valuation done on your business to see what a professional that specializes in valuing businesses thinks your business is worth.
  • Finally, when you go through the exercise of selling your business, make sure you get the full value of your business at closing.

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