Maximize Selling Price Of Your Business

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10 ways to maximize the future selling price of your business

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  • 1. Copyright Jeff Haltrecht | family business advisor 201110 Ways To MaximizeThe Future Selling Price Of Your BusinessTuesday, June 14, 2011

2. Why Should I Be Thinking Of Selling If Im Not Ready To Sell? Every business should be sold ortransitioned at some point, yoursincluded. When? is up for debate. But when that time comes, you need tohave put in place a number ofCopyright Jeff Haltrecht | family business advisor 2011items in order to maximize the moneyyou will receive from the new owner(regardless if that person is family or not). Waiting until you are ready to sell mayprove to be too little, too late tomaximize the value of your business.2Tuesday, June 14, 2011 3. Its Incredibly Hard To Predict When To Sell The Business The right time to sell is easy inhindsight. (It was at the peak of a 5-year sales run, right before the competitorintroduced a new product!) Its hard to predict the future, Copyright Jeff Haltrecht | family business advisor 2011knowing what that competitor, customer,or market trend will do to your sales. Thisis probably the most unnerving part ofowning your own business! 3Tuesday, June 14, 2011 4. When Your Gut Says Its Time Then Its Time No the right time to sell is whenyour gut says you have giveneverything you can to making thiscompany the best it can be. You know in your heart that someone Copyright Jeff Haltrecht | family business advisor 2011else will be in a better position tobuild on your legacy long-term. 4Tuesday, June 14, 2011 5. Be Prepared For When Its Right; Put Things In Order Starting Today1. Do one thing really well2.Remove yourself from selling the companys services3.Build leaders that will make effective decisions without you4.Put in place an incentive plan for the key senior most leaders5.Ensure positive cash flow6. Create a pipeline of new products or services7.Pay down debt to a manageable level8.Have a 15 year vision and a 3 year strategic plan Copyright Jeff Haltrecht | family business advisor 20119.Deploy technology that leads to improved productivity Some companies canbe sold right away, while10. Improve employee productivity by removing roadblocksothers need a few years toput some order into things. What follows is my list of the10 most importantitems you can do to helpmaximize the wealth you willreceive the day you decideto sell or transition. 5Tuesday, June 14, 2011 6. Do One Thing Number Really Well 1 Narrow your focus to one area of business and do that better than any other company. You can have a number of products that you make or a variety of categories that you retail, but they must all be tied to the same tightly focused theme.Copyright Jeff Haltrecht | family business advisor 2011 Provide your customers the opportunity to buy repeatedly, giving them choices to move up from incredibly affordable to items that cost more, but come with additional added value.6Tuesday, June 14, 2011 7. Remove Yourself From SellingNumber The Companys Products/Services2 The owner of a business must notbe the same person who sells itsproducts or services. If this were thecase, why would I want to buy yourbusiness? I would have to keep you as mysales leader and you and I probably dontwant that! Copyright Jeff Haltrecht | family business advisor 2011 Remove yourself from selling and doing thework, instead focusing on inuencingyour strategy, people, andproductivity. Your role now, more thanever, is to build future leaders who willcarry on without you. 7Tuesday, June 14, 2011 8. Build Leaders That Will Make Number Effective Decisions Without You3 Coach your leadership team to make decisions without you. Yes, you still need a say in high-risk situations, but the day-to-day operations must be theirs to manage. Copyright Jeff Haltrecht | family business advisor 2011 8Tuesday, June 14, 2011 9. Put In Place An Incentive PlanNumber For The Key Senior Most Leaders4 Smart employees start to sensewhen you are preparing to sellyour company. They feel a shift in howyou go about things. While you must deny the company is for Copyright Jeff Haltrecht | family business advisor 2011sale publicly, you can and shouldprovide the most importantleaders with an incentive to staywith the company through the transition,and for up to 3 years after. 9Tuesday, June 14, 2011 10. Ensure PositiveNumber Cash Flow5 collect soonerincrease sales Buyers pay more for companiesreduced cost of goodswith positive cash ow. Do as much as possible now to reduce the days reduce expenses outstanding on receivables or even charge up-front for services.charge up-frontCopyright Jeff Haltrecht | family business advisor 2011 10Tuesday, June 14, 2011 11. Create A Pipeline OfNumber New Products Or Services 6 What a joy it would be for a newowner to have products ready tolaunch. The value of this future revenueincreases their ability to pay a higher price,driven by a greater condence in the abilityto get a return on their investment.Copyright Jeff Haltrecht | family business advisor 2011 11Tuesday, June 14, 2011 12. Pay Down DebtNumber To A Manageable Level 7 The less debt the company has, the more valuable it is to a buyer. Money the new owner is prepared to invest can then go directly to sales and marketing initiatives that will deliver increased prots sooner, vs. being required to reduce debt load.Copyright Jeff Haltrecht | family business advisor 2011 12Tuesday, June 14, 2011 13. Have A 15 Year Vision Number And a 3 Year Strategic Plan8 In most cases, the current owner cando a better job of painting apicture of the opportunity than aprospective buyer because of theintimate knowledge you have of thecompany and industry.Copyright Jeff Haltrecht | family business advisor 2011 Show the prospective buyer whatgreat looks like and they will pay forthe opportunity to make it a reality. 13Tuesday, June 14, 2011 14. Deploy Technology That LeadsNumber To Improved Productivity9 Technology is a catalyst to increased prots because of how it improves productivity. It can be a piece of manufacturing equipment or software that helps track customer purchases; in both cases, the net benet is improved efciency. It is best to steadily spend on technology Copyright Jeff Haltrecht | family business advisor 2011over the years so there is no one-timemajor expense. Future buyersappreciate the attention given toefciency and will feel more comfortablepaying for its steady deployment.14Tuesday, June 14, 2011 15. Improve Employee ProductivityNumber By Removing Roadblocks10 While this is the last of the 10, it is no lessimportant than the others. The moreproductive your employees are,the happier they are with you astheir manager and the company.This translates into reduced turnover,more discipline, better ideas, and faster Copyright Jeff Haltrecht | family business advisor 2011execution all leading to improved prots. In the due diligence step of a sale, thebuyer can sense if people areproductive or not. Make thenecessary changes now by asking yourpeople what is keeping them from beingmore effective and then acting on theirsuggestions.15Tuesday, June 14, 2011 16. When The Time Is Right Someone Else Will Build On Your Legacy Selling or transitioning yourcompany is the natural and rightthing to do. It maximizes your wealth,while continuing to provide jobs for youremployees that help feed their families. Copyright Jeff Haltrecht | family business advisor 2011 Feel good about this transition andlook forward to doing something differentwith your energy, time, and wealth. You haveearned it!Cue the music, please!16Tuesday, June 14, 2011 17. Lead With Your Entrepreneurial Spirit While Accessing Breakthrough Solutionsthe A bout r! a utho I believe being a trusted advisorinvolves listening rst. The more Iseek to understand your business andwhat you are dealing with, the richer thedialogue becomes. I have a friendly andengaging work style that is balancedbetween asking questions, challenging, andCopyright Jeff Haltrecht | family business advisor 2011providing solutions for you to consider. What I dont do is make decisionsfor you. Our conversations are designedto stretch your thinking, for me to be asounding board, and most importantly, a Jeff Haltrecht | family business advisorcatalyst for you and your companysgrowth. 17Tuesday, June 14, 2011 18. Treating You With Respect, While Challenging For Better Performancethe A bout r!o auth Strategic Thinking When applied correctly, values guide behaviourDevand set the tone for interaction betweenLea opmentMod ness eling people. Here is what you can expect when we el ders work together: i ExceptionalBus hip Experience Treating you with respect Copyright Jeff Haltrecht | family business advisor 2011n M aratio ke Challenging for better performanceov ting Inn Helping you be internally driven Jeff Haltrecht | family business advisor Putting ideas to action Embracing change as the path to opportunity Communicating candidly Delivering results18Tuesday, June 14, 2011 19. A Safe And Private Place To Have A Proactive DiscussionsPro ductStrategic Growth Plans Helping small to mid size business Build your business with powerful yet simple strategies that add to company wealth owners realize wealth within the company so that when you choose to Family Business Advisor transition or sell sometime in the future, Working one-on-one, we take a solid look at your strategic plan, leadership style, andthe business is valued at the highest price management productivity, all with the intent of possible. helping you realize value within the companyCopyright Jeff Haltrecht | family business advisor 2011BoardSmarts Designed to give the senior leader(s) their own team of seasoned advisors who focus on providing solutions, while being a catalyst for leadership development and long-termbusiness growth. 19Tuesday, June 14, 2011 20. Have A Terrific Day! Contact Information Building Company WealthTM WEB & BLOG TWITTER LINKEDIN Copyright Jeff Haltrecht | family business advisor 20