How do I prepare the company for sale?
All businesses, especially small ones, have weaknesses. Because this is part of the normal development cycle of a company, the best way to handle hard truths is head-on and early in the process before buyer and seller have burned through considerable resources.
Here are the 5 most common areas of weakness that should be fixed prior to sale, or addressed directly during diligence:
Here are the 5 most common areas of weakness that should be fixed prior to sale, or addressed directly during diligence:
Category |
Weakness |
How to Address It |
Owner & Team |
|
Leadership development and systems-building |
Customers |
|
Prepare the data to show the “reason codes” for why it happened and why it’s unlikely to happen again |
Financials |
|
Spend time with the buyer normalizing one-time revenues and expenses |
Legal |
|
If the sum is small, settle it; or have a professional check it out and follow their recommendation |
Non-business factors |
|
Most buyers will move beyond almost anything if you proactively disclose and explain |