The Importance of Preparation

Here’s a story that highlights the importance of preparation. In the early morning after St. Patrick’s Day of 1990, celebrants would later report seeing two policemen in a hatchback pull up at the side door of the Isabella Stewart Gardner Museum in Boston, Massachusetts. But at the time, no one thought anything of it. Those two men dressed as police officers would be let in by the museum security guards, after they claimed to be investigating the fire alarm that had mysteriously gone off in the hours beforehand. Citing an open arrest warrant, the “officers” quickly handcuffed both security guards, wrapped duct tape around their eyes and mouth, then dragged them into the basement of the museum.

Over the next 81 minutes, the greatest art heist in history took place. Without the need of maps, the two men systematically worked their way through the museum, cutting canvases from their frames and unscrewing paintings from the walls. The estimated worth of their haul – $300 million. When the FBI later watched the two thieves’ movements through the museum’s infrared motion detectors, they would comment on the level of knowledge the men had of both the museum and the value of its contents.

To this day, the paintings and sketches stolen on the morning of March 18, 1990 are still missing. The thieves have never been caught. We may never know how the two men set off the fire alarm beforehand, or how long they poured over maps of galleries and auction histories. What we do know is that their preparation led to a successful heist. And when it comes to selling your business, there are lessons to be learned from art thieves.

Considering that the sale of your company may be the largest sale you ever make in business, it’s foolish to neglect preparation and potentially leave millions of dollars on the table, even though you’re not preparing to steal a Rembrandt. Unfortunately, most business owners don’t give this major life decision the attention it deserves. 

Why? 

The lion’s share of entrepreneurs have a strong bias toward action. Once they decide on a course of action, they prefer to dive right in and figure things out later. But you must realize that a lack of preparation will extend the time frame of the sale, reduce the selling price of your business, put less cash in your pocket, and lower the chances of a successful sale. 

Proper preparation, on the other hand, will elicit the opposite outcomes – you’ll increase the chances of a successful sale, shorten the time frame, command a higher selling price, and put more cash in your pocket. As with most skilled endeavors, preparation makes execution look effortless. Or, as the eccentric mathematician, E. Kim Nebeuts once said, “a good preparation takes longer than the delivery.” So, channel your inner art thief. Prepare for the event just as if you were prepping to rappel through the Louvre and prance off with the Mona Lisa. Doing so will not only ensure the process unfolds as smoothly as possible, but you’ll likely walk away with a higher return.

Types of Preparation

I offer dozens of strategies in this book to prepare your business for sale. Act on them. In over twenty years of selling companies, I can tell you that taking action to prepare is the one strategy that’s nearly failproof. 

But, no two exits are alike. Each exit must be deliberately planned. There’s no templated process you can follow to prepare your company for sale. Rather, the preparation stage involves creating a plan, prioritizing your plan, and then executing your plan. When I’m approached by a potential client, we usually start by preparing an assessment, which includes a customized exit plan or strategy. But in the absence of a custom plan, you can follow the general guidelines outlined in this book.

If you’re willing to take the time to prepare your business for sale, you should also be sure that the firm you hire can assist you before you begin the sales process. This exercise is formally known as “exit planning.” Many M&A advisors and investment banking firms are heavily biased toward action and prefer to put a company on the market and sell it as quickly as possible. They may not be as concerned with maximizing the sale price and doing the hard work necessary to ensure a successful exit. Be sure whoever you hire is willing to help you in the preparation stage.

If you aren’t intending to spend time preparing your business for sale, then be honest with your advisors, and be willing to accept far less than top price for your company. Luckily, most professionals are accustomed to dealing with clients in situations that are less than ideal and will appreciate an owner who’s upfront regarding how much time they can invest in getting their company ready to be put on the market.