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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:
Category
Weakness
How to Address It
Owner & Team
  • Owner holds top relationships, leads strategy, is the expert
  • High turnover 
​Leadership development and systems-building
Customers
  • Concentration (high % of revenue from one or a few)
  • Customers aren’t buying year over year, or are buying less
  • Warranty claims  
Prepare the data to show the “reason codes” for why it happened and why it’s unlikely to happen again
Financials
  • A recent spike in your performance (and asking a buyer to pay a multiple of the spike)
  • Off-the-books records (paying suppliers in cash, or your yacht captain as a consultant) 
​Spend time with the buyer normalizing one-time revenues and expenses 
Legal
  • Litigation (ongoing, recurring, or the threat of)
  • Contractors vs. Employees 

If the sum is small, settle it; or
have a professional check it out and follow their recommendation 
Non-business factors
  • Threatened divorces
  • Not-so-silent “silent” partners
  • Arrests/convictions
  • Tax liens
  • Public problems 
​Most buyers will move beyond almost anything if you proactively disclose and explain
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  • People
  • Grow
  • Companies
  • ...
    • Investment Criteria
    • CEO
    • Guide to Selling Your Company
    • Mutual NDA
    • Contact us
    • FAQs
    • Legal