Michael ValdezBy Michael C. Valdez, CFP®

Selling your business? Economic conditions over the last 10 years have distracted many successful business owners, making it difficult to stay focused on business operations and future succession plans.

The time has come to begin selling or transferring the business for many business owners. The “talking heads” tell us daily of the economic uncertainty that surrounds us. However, there are many who believe now is the time to start the process of engaging with advisors in the business succession conversation.

Understand that rewards will not be immediate. There will always be a few business owners who will be fortunate, finding anxious buyers who will ignore apparent flaws and are willing to offer what you believe is a great price. Successful succession and transition depend on the company’s (success) being repeatable, sustainable, scalable, and transferable. Identify and document these components — It is a critical part of your succession process or selling your business.

What are the Value Drivers when selling a business?

The term that is frequently used to describe desirable features is Value Drivers. Consider the following questions:

  1. What systems are in place to provide effective financial controls?
  2. What operating systems are you using to improve the sustainability of your cash flows?
  3. By what percent are your cash flows growing each year?
  4. Do you believe your facilities appearance is consistent with your asking price?
  5. What is it about your customer base that will lead a buyer to recognize that it is not only diversified but also solid? What strategies are you employing to make your product/services enduring so that your customers remain loyal?
  6. Would you share your written business plan that defines your desired growth strategy?
  7. What is it about the current management team would lead a buyer to believe that they are loyal, motivated and stable?

Does your company have an infrastructure?

Companies without infrastructure aren’t transferable. Remember that owners who want to complete a sale or internal succession plan today, but who are not immediately successful, should not blame the outside environment. A lack of viable offers may be a result of non-existent or inadequate succession planning. These include complete documentation, strong and growing financials, strategic planning and/or lack of management infrastructure, all of which may occur in economies both strong and weak. Have you considered a process to identify where you may modify your business to enhance the ability to sell your business?

Selling your business? Enhance its value

We advocate that clients may want to use this time to enhance the value of their business. They will be better prepared to enjoy the success of their businesses on their terms when they’re ready. Companies that follow or embrace a succession process now will be the most sought-after businesses in their field when they are ready to transition. Gold medal winners at the Olympics always stress the preparation and training prior to them winning the gold. Are you ready to go for the gold?

Michael Valdez is the branch manager of Synergy Wealth Alliance’s Tampa office and an Investment Advisor Representative. Securities and advisory services offered through LPL Financial, member FINRA/SIPC. LPL Financial is under separate ownership from any other named entity.