April 7, 2014
- market conditions
- expected valuation
- competitive environment
- succession options
- owner(s) outlook for growth and profitability
Some of the factors are external and beyond the control of the business owner while other factors are internal and can be dealt with to create a better potential outcome for the owner. By using an independent financial advisor you can certainly receive assistance with strategy and tactics involving the internal factors.
An independent financial advisor can act as a key useful starting point and help the company establish a realistic potential sales price that will be an important ingredient of course in the sales process. Keeping in mind one of Warren Buffet’s famous lines “price is what you pay and value is what you get”, the financial advisor can help you get the price that appeals to the seller while putting together the rationale for value that appeals to the buyer.
Another key thought process that the seller should consider, and one that the advisor can be especially helpful with, is to understand the difference between industry or special interest buyers and financial buyers. The former may often pay a premium for a business given perceived potential synergies. The advisor can help the seller think through and draw out these potential synergies and ultimately assist in identifying potential buyers that will pay the highest premium.
By working with the business owner through external and internal factors as well as the range of potential buyers the advisor should be able to assist the business owner in addressing the question as to when to pull the trigger and start the sale process.