You’ve worked hard at building your business. You navigated the startup challenges; later, the growing pains that came with success and expanding. You’ve got plans for more growth. Eventually you’ll consider acquisition offers. But you’re not ready to think about that now.
Reality check. Busy as you are, you should be thinking about it. Doing more than thinking, in fact. You should be planning for the sale now – because if you don’t, even with your business being as great as it is, you could lose tremendous value.
In business as in life, planning ahead gives you control, says Kevin Shaw, MBA, vice-president at Renaissance Mergers & Acquisitions Inc. “Selling a business is a process. And like any process you choose to enter, defining the boundaries is essential to achieve your predetermined goals. Many business owners will sell after receiving that single unsolicited offer, and consequently they will end up leaving money, terms and peace of mind on the table.”
Renaissance, a boutique advisory firm that specializes in the sale of private businesses with values between $5 million and $50 million, will be a key participant in the Business Excellence Series event “Finding the Best Price and Buyer for Your Business,” May 8 at the Vancouver Club. The event’s panel of experts, including Renaissance president Mike McIsaac, CPA, CA, will discuss such issues as being aware of the right price and right terms of a deal.
Because, contrary to the optimistic but naive idea that an offer ensures a comfortable exit, the path to selling is strewn with pitfalls. As Shaw explains, there are three common misconceptions about selling:
1. As owner, you know the value of your business. In truth, says Shaw, “the value of your business is ultimately what someone is willing to pay – which, in the world of private businesses, is largely unknown. The role of a mergers and acquisitions (M&A) adviser is to extract that value for the business owner.”
2. Selling will be easy. “Selling your business for one dollar would not be hard. But maximizing the price and, more importantly, the terms, is very challenging. Again, this is where you’re best to consult an experienced and educated M&A adviser.”
3. My accountant and/or corporate lawyer can advise me through the sale. True…up to a point. “Yes, your corporate accountant and general corporate lawyer will have an important role to play in your transaction. However, those roles are very different than that of an M&A adviser.”
An M&A adviser, Shaw says, guides owners through the various phases of the process, starting with what their goals are on exiting their business. “Do they want to remain a shareholder or an employee? Do they want to sell 100% of the business? Each option will yield a different process.”
Shaw adds, “Going forward, an owner should also consider if certain employees might be suitable for ownership positions, as the sale of the business will create a natural break where new shareholders can be introduced.”
No question, the widespread daydream of an easy sell followed by a round-the-world vacation is a pleasant one. But that vacation is much likelier to result from a carefully prepared plan, Shaw suggests. “Preparing for and selling a business is an arduous process that requires patience, effort and expertise. Everything you need, we at Renaissance will help you to find, analyze and develop – starting with a one-hour confidential informational session, and keeping confidentiality paramount throughout the process.”
Shaw recommends owners attend “Finding the Best Price and Buyer for Your Business” whether they are selling in one year, five years or far in the future. “The May 8 Business Excellence Series event will help them understand the process, because the process and the considerations that go into it will ultimately lead to building better businesses. And better businesses will fetch higher prices when the time does come to sell.”
