Prepping Your Business To Sell - Mike Metzger, Murphy Business Systems - Wendy Dickinson

Show Notes written by Wendy Dickinson, Catalytic Conversation$.

Ugly Baby, Pretty Baby: Prepping Your Business For A Sale


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Introduction:  
A lot of you plan to sell your business one day.  However, the odds of successfully selling your business are against you.  

Did you know that there are ways to stack the odds of selling successfully in your favor?  Today Mike Metzger of Murphy Business Sales and I discuss the steps that you can take to prepare your business to go on the market.

We look at the things that you can do to build value in your business.  We discuss the most common mistakes that business owners make when putting their business on the market.  Mike and I want you to know what you don’t know.  What you don’t know can definitely hurt your business.  Finally, Mike and I share our recommendations for steps that you can take to prepare your business to sell, and then integrate successfully once it’s sold.

I think you’re going to want to take notes!

SHOW OBJECTIVES: THE WHY

• 4 out of 5 businesses that go up for sale, don’t successfully sell.
• Of the businesses that close the deal, 80% fail to integrate successfully.
• 73% of business owners are unhappy with the results of the sale of their businesses 1 year out from the close.
• Over 60% of business owners are planning to use the proceeds from the sale of their business to fund their retirements.

KEY ISSUES: Problems You May Encounter:

1. Owners don’t really know how much their business is worth.
2. Owners have built the entire business around the owner.
3. Owners have failed to build value within their business - value to a prospective buyer, that is.
4. Owners fail to run the business successfully once the transaction occurs.
5. Owners don’t get the timing right.
6. Owners don’t have the right advisors.
7. Owners don’t have a communication plan for their team and word leaks.

What You Need To Know - THE WHAT:

• Identify the consolidation and trends going on in your industry.
• Define your priorities for a sale.
• Selling your business is a process. Read about it.
• Look at your business through the eyes of a prospective buyer.  Pay particular attention to:
  • Accounting, bookkeeping and cash reserves
  • Identify what a prospective buyer will not pay for - outdated inventory is not their problem, it’s yours.  Sell what needs to be sold ahead of time.
• Look at the tasks associated with running the business, handling the sales transaction, and integrating into the new entity under the new owner.
  • Who needs to do what, when?
  • What role will you play during each stage?

What You Need To Do - THE HOW

1. Get a valuation by an independent source.
2. Consult your financial planner to determine the amount you need to live comfortably in retirement.  Could you manage an earn out, or reinvest as minority owner?  If so, for how much?
3. Develop relationships with a broker, attorney and accountant who have this kind of expertise.
4. Take a 2 week vacation and don’t contact the shop.  Use this as a stress test. Anything that “broke” while you were gone was a weak point that needs shoring up.
5. Find out what the steps are and what the process looks like for your business.
6. Conduct an inventory, a cash flow analysis, account receivables over 90 days are considered a lost cause.  Collect on those ahead of time.
7. Consider the “curb appeal”.  Clean and spruce up ahead of time.
8. Prepare your team, adn your customers, for transition.  It will cost you if your key performers/customers up and leave once the deal is closed.  

Resources:

1. Mike Metzger, Murphy Business Sales, m.metzger@murphybusiness.com, or 1-804-617-6328.  Connect with Mike on LinkedIn here.
2. Visit my website, to get your free downloads here
3. Exit Rich, by Michelle Seiler Tucker and Sharon Lechter, An Inc. Original, June, 2021,.  Preorder here. 
4. “The Most Common Mistakes Business Owners Make When Selling Their Company”, by Rex, March 28, 2016, howtosellmybusiness.com, 
5. Work The Bugs Out: Practices To Work In, & On, Your Business, by Wendy Dickinson, Publish: TBD.  Excerpt: Free Downloadable PDFs to work through.

You can connect with Wendy Dickinson on FB, LinkedIn, and Instagram.


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