As the end of the year dawns, business owners naturally reflect on the past year, and look to the future. Owners who either plan to sell in 2022 or who are open to the idea need to begin planning now. This begins with getting the right advice from an advisory team that includes an M&A advisor. Here are six things owners must do now to be positioned for a sale in 2022.

  1. Assess the business honestly. Owners tend to see their businesses through rose-colored glasses. Entrepreneurs preparing for a sale must take off the glasses and assess the business’s strengths and weaknesses honestly. How does the company compare to its competitors? What is it doing well and poorly? This information is critical for building more value in the final leadup to a sale.
  2. Get a professional valuation. Value is always in the eye of the beholder, but some objective benchmarks can help with assigning a value to a company. A professional valuation lends credibility to the owner’s value assessment and may help owners look at their businesses more realistically.
  3. Get those books in order. Buyers do not want to start due diligence to find that the books are a mess, nothing is documented, and there are serious debts and accounting issues. Now is the time to get the books in order, so that buyers can see clean accounting and a steady increase in profits when they undertake due diligence.
  4. Assemble a deal team. Owners should not simply rely on their in-house counsel or accountant. An M&A specialist team lends credibility to the deal and frees the in-house team to continue focusing on growing the company. Owners must talk to an advisory team early in the process to get guidance on building value. The right deal team is critical to the success of the sale, especially at negotiation time.
  5. Generate value, especially recurring value. Buyers are risk averse. They want to take on a business knowing that it can succeed and believing that they can drive its current value even higher. Owners can encourage buyers to take an interest by generating as much value as possible, especially recurring value in the form of subscription services.
  6. Assemble an exceptional team. Owners want to ensure that their businesses are well-positioned for success. For some, though, this manifests as micromanaging. Businesses that are excessively owner dependent lose value during the M&A process. So now is the time for owners to ensure they have a competent team ready to take the reins from day one.

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