What Can You Do to Prepare to Sell Your Business?

Many manufacturers would never think of selling their companies. They may be sustaining a family tradition, or looking to build one for future generations. But for some of these leaders, an opportunity to sell will appear anyway — especially for manufacturers with strong financials, solid customer bases, and innovative products.

Unfortunately, the “I-will-never-sell” mindset can leave owners flattered but flustered when a buyer knocks on the door. Because they’ve never considered an exit, they haven’t prepared their companies for merger and acquisition (M&A) activity.

This is a critical mistake, as selling and planning is a process in its own right, and many things take place before the actual sale. Preparedness can (1) identify if a sale is the right choice and (2) prepare the company to attract the right price. Yet just half of SMEs seek outside experts for strategic planning in readying their companies for M&A. Here’s how to get started now:

Assume a sale is possible: Every manufacturer owner should know the value of his or her organization to others — in part, to review the organization’s current strengths and weaknesses. Kicking the tires on your own company can open your eyes, stimulate innovation, and can lead to improvement initiatives.

Conduct a formal business valuation: Identify all assets — facilities, equipment, proprietary software and business systems, intellectual property, etc. — and work with accountants or advisers to value them.

Identify M&A roadblocks: This step pays dividends even if you never sell. Rigorously assess areas that require improvement, such as operational problems (e.g., EHS, plant efficiency, equipment reliability, product quality) or market issues (e.g., customer defections, poor brand recognition, aging product portfolio). This process will also identify and resolve legal and financial conditions that could scare away buyers.

How much is your company worth? More importantly, what are you doing to make it worth even more — whether to a buyer, or you?

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