Caution – Did you know that 80% of businesses for sale do not sell, because of inadequate planning? Planning is the only proven way to guarantee the successful sale of your business.
Did you know that for most owners, 90% of their wealth is tied up in their business? Further, studies show 89% of business owners are reliant on the sale of their business to fund their retirement. However, the U.S. Small Business Administration estimates that only 20% of the privately-held businesses available for sale each year are successfully sold.
All business owners will eventually leave their business, the only question is when. The reality is, you never know exactly when you will need to sell your business, and ensuring the business is ready to sell is one of the best ways to protect yourself, your family and your largest asset: your business.
It might surprise you to learn that having to sell your business when you are not prepared to do so and when your business is not ready to be sold could cost you 50% or more of your final business’s value. Making sure your business is ready to be sold is crucial as a business owner. Still, 70% of M&A professionals surveyed said that business owners are minimally prepared or not prepared at all to sell or transfer their business.
The first step in moving on is evaluating how ready your business is for sale. Deciding how and when to exit a privately-owned business will be the single most important financial and personal decision you’ll make in your lifetime. Despite this fact, most owners are not prepared for this life-changing event. For most owners, more than half of their wealth is tied up in their business.
Not being prepared and having to sell can cost you 50% or more of your final business value. You may be in that situation right now. If you are thinking about selling your business now or in the next five years, you need to start preparing now.
The very first step you should take is simply to evaluate your business’s readiness for sale. Here are the top 10 questions to ask yourself when determining whether your business is sale-ready:
How attractive is your business from a buyer’s perspective?
Are you ready to transition your business?
If you struggle to answer any of these questions and you are contemplating selling your business, or if you just want to make sure you are protecting your largest asset, then our Assessment would be beneficial to you. It will give you peace of mind knowing that your business will be ready to sell when you need to leave the business, whether it’s 10 years from now or tomorrow.
How do you put your business in prime shape to sell?
What do potential buyers look for when buying a business?
What is your business worth?
What could be done to increase its value?
How much money do you need and what sale price will give you that?
Can your business command that price or anything close to it?
Will you have the necessary funds for your desired post-sale lifestyle?
Are you emotionally ready to pursue a life after business ownership?
The first step to selling any business begins with preparation. Our Exit Strategy and Valuation provides a wealth of value. With our decades of experience helping to sell hundreds of businesses, we can provide you with unbiased advice that will greatly improve the chances of a successful sale. The Assessment is a personalized, foolproof game plan to help you prepare for the sale of your business. It includes a written report, as well as an in-depth consultation and review of your business. You can choose to implement the plan several years in advance or, if you are presently in the process of selling your business, you can use it right away. It contains tried-and-tested, step-by-step instructions on a range of topics to consider when planning the sale of a business. The process helps you discover the important presale steps you should take to guarantee a successful sale. The process is completely confidential and prepared by our experienced intermediaries with over 10 years of experience.
Our major goal is to improve your chances of a successful sale. We have seen literally thousands of companies. Having this knowledge allows us to quickly look at your company and advise you on what to do — and what to prioritize.
The purpose of the Sale Readiness Assessment is twofold: One, it will help determine the value of your business, and, two, it will reveal the aspects of your business that are weak and need improvement.
Our assessment is an external, unbiased evaluation of your business’s worth on the open market, calculated by grading your company against key factors. We will also determine the value gap between what your business is currently worth and its potential worth. Further, we will show you the steps you can start taking today to build a business that you will be able to leave when you are ready, on your terms and for a price that will ensure you are able to succeed even after you have exited the business. After assessing the attractiveness of your business as a sale prospect, flagging areas in need of improvement and creating an improvement plan and timeline, you will then be ready to decide between the following options:
Proceed with sale plans based on your positive assessment of the sale-readiness of your business.
Invest the time and effort necessary to make your business more attractive to buyers, which will delay your sale offering but will lead to stronger buyer interest and a higher sale price.
Offer your business for sale in its current suboptimal condition, with the awareness that you’ll likely receive lower buyer interest and a lower sale price.
Liquidate your assets based on your determination that the condition of your business will not appeal to buyers or command a price worth a sale effort.
Whichever option you choose, you will know that the decision you make is an informed decision, and not a one made under the pressure of needing to sell your business now. With proper planning, you will know that you are doing everything you can to protect your business and prepare for your inevitable exit of the business.
However, there are several additional benefits to having a Sale Readiness Assessment prepared for your business, including the ability to:
View your business from a potential buyer’s perspective.
Assess the condition of your business as a sale prospect.
Identify areas of opportunity, as well as areas of risk that could lower the value.
Benchmark the current condition of the business.
Pinpoint the personal, financial and business actions needed to improve value and readiness.
Determine where you fit in the business valuation matrix.
Analyze how sellable your business is presently based on key salability factors.
Improve the salability of your business.
Discover the important questions you need to ask before selling your business.
Establish whether your business will be easy or hard to sell.
Business owners who are ready to sell their business now.
Business owners exploring the possibility of selling their companies.
Business owners who are in the process of selling their businesses and would like a second opinion.
Business owners not wanting to sell now, but looking to prepare for an eventual sale.
Business owners who wish to determine whether it makes sense to sell now or in the future.
As a business owner, you will eventually exit your business -- either voluntarily or involuntarily.
Deciding how to exit your business is the most important decision you’ll make in your lifetime.
More than 50% of your wealth may be tied up in your business.
Not being prepared and having to sell could cost you 50% or more of your final business value.
Independent: Obtain an independent and unbiased opinion when deciding to sell your business.
Investment: Maximize the value of your most valuable asset – your business.
Intelligent Investment: Save time and money before committing to a sales process.
Fresh Viewpoint: Knowing your company’s strengths and weaknesses can improve the value of your business.
Improve Chances: Get a chance to increase the success rate of the sale of your company.
Flexibility: Get recommendations that you can work on while you are trying to sell your company.
One-Time Fee: Is a one-time fee void of surprises; there are no ongoing commitments or other unexpected costs.
Confidential: Is 100% confidential and personalized for your business and includes an in-depth review of your business, financial statements and other key documents.
Quick Turn Around: Is quickly turned around to you within three to four weeks of receiving the necessary information.
“Surprised I could get such useful advice – the advice was priceless in helping me decide to sell. You asked several questions I never considered before.”
“I decided to hold off on selling my business for three months while I work on your recommendations.”
“I will receive many times over the small price I paid for your advice.”
Sign our consulting agreement, complete payment and request us to sign a non-disclosure agreement, if desired.
Complete our comprehensive sale-readiness questionnaire.
We will thoroughly review your completed questionnaire along with the other information you provide and contact you within 7 calendar days upon receiving all documents to schedule our consultation. Note: An additional $100 fee applies if you would like to expedite the process and have us contact you within 3 calendar days upon receipt of all documents to schedule the consultation.
We will set up a confidential consultation with you to:
Discuss the information you provide on the questionnaire.
Ask follow-up questions that will give us a complete understanding of your business.
Explain our assessment and findings, recommend the next steps as well as the options you can take to be fully prepared for the sale.
The exit strategy is a 20-100 page personalized foolproof game plan to help you plan the sale of your business. It includes a written report, as well as an in-depth consultation and review of your business. You can choose to implement the plan several years in advance or, if you are presently in the process of selling your business, you can use it right away. It contains tried and tested, step-by-step instructions on a range of topics to consider when planning the sale of a business. The process helps you discover the important pre-sale steps you should take to guarantee a successful sale. Personalized advice is given on a variety of important factors, from pricing your business to preparing for due diligence. The process is completely confidential and prepared by our experienced intermediaries with over fifteen years of experience.
Contains a prioritized checklist of the most important presale steps you should take to sell your business quickly and reliably.
Contains a comprehensive document checklist, showing the paperwork a buyer will likely request of you before and during due diligence.
Is 100% confidential and personalized for your business, and includes an in-depth review of your business, financial statements, and other key documents.
Contains a prioritized checklist of the most important pre-sale steps you should take to sell your business quickly and reliably.
Contains a comprehensive document checklist, showing the paperwork a buyer will likely request of you before and during due diligence.
Is a fast turnaround in your hands within three to four weeks of receiving the information needed.
Is a one-time fee void of surprises; there are no ongoing commitments or other unexpected costs
Developing an exit plan several years in advance.
Considering selling but would like to review their options and the process before committing.
Currently in the process of selling but would like to be better prepared.
Interested in determining the approximate value of their business before beginning the sale process.
The Exit Strategy is also beneficial if you are preparing to sell your business and are considering your options but are not quite ready to formally begin the process.
Personal, financial and business actions to improve value and readiness.
Advice to minimize or eliminate potential deal-killers upfront.
Recommendations regarding proper courses of action ― sell, wait, hire a broker, do it on your own.
Unbiased advice regarding other alternatives to selling your business.
A list of factors that can help increase the value of your business prior to sale.
Tips to improve your chances of a successful sale.
Steps to improve your business’s salability and to maximize the price
Attractiveness: Assessment of the condition of your business as a sales prospect.
Buyer’s Point of View: Viewing your business from a potential buyer’s perspective.
Confidentiality: How to maintain the confidentiality of the sale.
Deal Structure: Key deal terms - non-compete agreement, transition period, price and financing.
Documents: Recommended key documents to prepare.
Financing: Availability of bank financing and/or assistance with seller financing structure.
Marketing Strategy: Determining the best approach to market and advertise your business for sale.
Operations: Which aspects of your business and personal plans are weak and need improvement.
Preparation: Recommended steps to prepare the business for sale.
Deal-Killers: Assistance in identifying potential deal-killers.
Risks & Opportunities: Determining where the risks and opportunities are in your business.
Salability: Comprehensive assessment of the salability of your business.
Terms: Should I ask all cash? Is financing available for my business? Should I finance the sale?
Valuation: Determining a range of value (25% +/-) for your business. You can elect to have us prepare a formal valuation if you would like a more nar row range.
Do I need a business valuation? What can I do to increase the value of my business?
Should I finance the sale? Will my business qualify for bank financing?
How salable is my business now based on key salability factors?
What can I do to increase the chances of selling my business? How attractive is my business from a buyer’s perspective?
What is the ideal marketing strategy to sell my company? How will I keep the sale confidential?
What points should I highlight about my business? What valuation methods are most appropriate for my business?
What terms should I offer buyers if I finance the sale?
Should I sell to a competitor or to an industry outsider?
Who is the ideal buyer for my company? How do I attract the ideal buyer for my company?
How will buyers evaluate my business? Is now the right time to sell my business?
Is selling my business the best option for me?
Are my financial statements prepared so that they can be shown to a prospective buyer?
What role will I play in the company after the sale?
How can I ensure that my employees stay after the sale?
What type of information do I need to disclose to a buyer?
We are specialists with decades of experience in selling businesses, which gives us the expertise to value a business with the main goal of helping you sell your company successfully. This experience is important when it comes to valuing a business with the intent to sell your company. Companies that specialize exclusively in business appraisals often do not have an in-depth understanding of a buyer’s needs and wants. Having this knowledge is paramount in pricing your company to sell. By properly valuing your company, you greatly increase the chances of selling your company, and often at a much higher value. And because we are not commissioned based, our valuation is unbiased.
Most appraisals are performed for these legal purposes; however, receiving an appraisal in this format is of limited use to you if your intent is learning the value of your business to sell it. This type of appraisal may not reflect the actual market value of your business and may be of little use to a business owner. Most business valuations are of little use to an owner because they are too esoteric and confusing, and therefore, are of little practical value. That is why it is essential to obtain a business valuation from an experienced broker who will normalize your financial statements to reflect the true value of your business.
A price must be established for your business before we begin the sale process, and financial statements are the basis of all business valuations. But, if you’re like most owners, you’ve operated your business in a way that’s calculated to minimize taxes. You may have given yourself and family members as many perks and benefits as possible, kept offspring on the payroll and plowed profits back into capital improvements. These and other common practices are designed to keep your profits (and your taxes) low, perhaps artificially so.
In order to properly value your business, these financial statements must be “normalized,” or “adjusted.” Financial statement normalization involves making numerous adjustments to your financial statements so the true earning capacity of your business can be identified. Common examples include your salary and perks, family members’ salaries, expenses or income that would not be expected to recur or continue after the sale, personal auto, insurance, cellphone, child care, medical, travel, depreciation, amortization, investment or other non-operating expenses or income, interest payments on any business loans and other one-time or non-recurring expenses. Other adjustments also often need to be made, such as adjustments to depreciation, amortization, and other one-time or non-recurring expenses. Removing owner-specific perks, benefits and expenses will make your company look as profitable as possible.
Adjusting the financials allows us to compare your business to other businesses using common financial metrics, such as seller’s discretionary earnings (SDE) or earnings before interest, tax, depreciation and amortization (EBITDA). SDE is the most common metric used by buyers, business brokers and many other professionals for valuing companies with annual revenue of less than $5 million. EBITDA is the most common metric used for valuing businesses with more than $5 million in annual revenue.
A Spreadsheet Calculation of Value is suitable for any business owner that would like to avoid the time and expense of a more technical, formal report. A formal report is not necessary for most small businesses with annual revenues of less than $5 million. A Spreadsheet Calculation of Value is useful if you are considering selling your business and would like a ballpark idea of what your business is worth before committing more time, money and effort to the sales process. The formulas we use to make this calculation are based on what 95% of interested buyers will use to value your business and are accurate to within 10-20% of a more formal report. With this method, we avoid using highly technical business appraisal methods that are exclusively used for appraising a business for legal purposes. This allows you to save on the cost of a full appraisal, which might not be necessary for your purposes. The process includes the following:
A spreadsheet mapping out the key variables and featuring multiple valuation methods, with low, medium and high suggested pricing, based on your financial statements.
Pricing guidelines, industry rules of thumb and comparable industry transactions. This allows you to see how the critical variables affect the price of your business.
Adjusting 3-5 years of financial statements with adjustments footnoted.
Microsoft Excel Spreadsheet Calculation of Value
Valuation is based on a multiple of your business’s profitability and includes a range of values from low to high. The variables are contained in a Microsoft Excel spreadsheet, allowing you to see their impact.
Analysis of trends in monthly revenue, seasonality, and variations of income and expenses that may affect the value of your business.
A range of values based on several valuation methods, which include rules of thumb, multiple of profitability, and a market approach based on comparable transactions in your industry
Analysis of seller financing strategy and recommendations with a determination of cash vs. seller financing price + number of months to break even
Maximum debt capacity, post-sale cash flow and income projections, and their impact on valuation
Identification, analysis and ranking of the factors that positively and negatively affect the value of your business and a list of recommendations you can implement to improve the value of your business.
When selling your business, maintaining confidentiality is crucial to a successful transaction. At Morgan & Westfield, preserving your confidentiality is as important to us as it is to you. We understand the importance of maintaining confidentiality and have developed consistent strategies to help ensure your transaction remains confidential from beginning to end. Morgan & Westfield adheres to a strict code of ethics designed to help maintain confidence, trust, loyalty and good faith. We place this duty of care above our own personal interests. A confidential relationship fosters trust and encourages an efficient exchange of the sensitive information necessary to get the job done. All information shared with us is held in the strictest of confidence. If you would like us to sign a confidentiality agreement before releasing your sensitive information to us, you can make that request here: Secure.Echosign.com