Just like a good bottle of wine that is opened at the right moment, the thought process leading to the sale of a business must mature enough to deliver the expected results. In other words, every business owner should anticipate the transfer of their company. Why? To increase the chances of a successful transaction and to maximise the value of the business when it’s sold. Let’s take a look at the essential steps to ensure that your business transfer becomes a fine vintage!
Ask the right questions to anticipate your business transfer
We often tend to view the transfer of a business solely from the perspective of the sales process. But this approach overlooks a crucial phase, the preparation for the transfer of both the business and its owner. “Selling, yes, but to whom?” “When is the best time to start the process?” “What will happen to the real estate?” “What will my future look like after selling the business?”… Since the answers to these questions will inevitably impact the overall process, it is essential for the seller to understand the effect each decision will have on the transfer plan.
Conduct a comprehensive diagnostis
A diagnosis goes beyond just an economic evaluation of the company. It primarily serves to…
- Assess how ready the business is for transfer.
- Identify the driving factors and potential obstacles in the transmission process.
- Define the ideal buyer profile: Financially, in terms of the skills required to continue and grow the business, but most importantly, based on the seller’s criteria;
- Perform a complete legal and tax check-up.
Gaining clarity and allowing sufficient time to prepare the business… These are just a few reasons why it’s beneficial to conduct a diagnostic several years before the transfer.
Prepare the business to be an attractive acquisition candidate
How far in advance should you start? Typically, two to three years, during which the owner can…
- Increase the transferable potential of the business by limiting weaknesses or reducing the dependence on the “business-owner” relationship.
- Raise the value of the business by focusing on its strengths, gradually eliminating any questionable practices, and optimising and normalising the EBITDA.
- Optimise the transfer process by simplifying the company structure and separating non-operational assets, such as real estate.
Just like making wine, where critical decisions are carefully considered in advance, anticipating the sale of your business will help avoid unpleasant surprises when it’s time to reap the rewards of your hard work.
