Exit and Growth Strategies for Middle Market Businesses

5 Ways to Maximize the Proceeds From the Sale of Your Business | Part 3

By Brian Ballo | Mar 18, 2014

MoneyThis Blog Post is the third in a series of 5.

Naturally, business owners believe that their business can be sold at the higher end of the pricing range. However, an attractive Letter of Intent to Acquire typically does not come unsolicited. Therefore, to increase the odds of maximizing the proceeds from the methodical sale of your business, the following tactical steps can be taken:

3.  Assemble Accurate Financial and Operational Information

Buyers pay more when they are comfortable that historical and pro-forma financial statements are accurate. Three years audited financial statements is a best practice, although some buyers may accept reviewed financials instead.

Having updated and accurate financial and operational information will also enable you, as a business owner, to understand and make pre-sale improvements. In  addition, good  documentation will also permit  your advisory team  to identify relationships  or transactions which  could have purchase  price  implications, such  as  assets on  the  balance sheet that have been valued on a historical basis, which should be adjusted to reflect market prices.

The buyer’s due diligence requests are coming. To give the buyer confidence, and assist your advisors in responding to the buyer’s requests, operational and financial data that is assembled, reliable and clear, make the buyer feel he knows what he is getting, and as a result likely increase the purchase price. Your investment banker will summarize the company’s numbers and story in an initial Confidential Descriptive Memorandum, then, organize the data in a Virtual Deal Room for password access.

Posted by Brian Ballo.

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