By Stan Bailey, Chairman & Founder
There are 12 pieces of advice I would offer any company CEO contemplating maximizing the value of their company through its sale:
- Don’t overlook a plan of value maximization – “hope is not a plan.”
- Don’t attempt without the right advisor. Recent independent research by academics showed that “private sellers receive significantly higher valuations when they retain M&A advisors.”
- Don’t have all your net worth in the company.
- Don’t forget to put your financials in good order – CPA compilations/taxes at minimum.
- Don’t put personal assets on company balance sheet – no boats, RVs, resort homes, etc.
- Don’t forget important events/elements of your history.
- Don’t forget your key employees – employment/non-compete agreements advisable.
- Don’t pre-determine your deal process – no two deals are alike.
- Don’t forget fit, chemistry and culture.
- Don’t focus on deal price only – terms and structure add value to a deal.
- Don’t fear “earnouts” – objective, measurable performance criteria add value.
- Don’t underestimate deal “closing” efforts – causes most failed deals.
Regardless of the type of industry or respective company demographics, this advice is applicable. For most company owners, a sell-side process will be the first and last time they do the largest financial transaction in their business careers of such size, complexity and financial importance to the futures of their families and employees. It is both challenging, emotional and stressful to the owner since they are “selling their baby.”
Stan Bailey is the Founder and Chairman of Ironline Advisors, a lower middle-market M&A advisory firm headquartered in Birmingham, Alabama with offices in Dallas, Texas and Lexington, Kentucky. For the past twenty-seven years, he has completed dozens of M&A transactions for corporations, private equity firms and his own investment portfolio.
Ironline Advisors provides business transition services, including strategic value maximization, generational business transfer, and M&A advisory to lower middle-market, privately-held companies. With years of business and transaction experience, Ironline’ s team of professional advisors has senior management, operations and transaction expertise to assist their clients with transition-related activities. For more information, visit www.Ironlineadvisors.com or contact Ironline at (205) 873-9597.