Selling High: The right time to sell your business

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Selling High: The right time to sell your business

As a business owner, you control the value of your company—regardless of its condition. The key to selling high is to plan for maximum value.

We all know the investing maxim: buy low, sell high. It is as simple as they come, but why do so few business owners know when to sell their businesses to maximize value? I believe it is because they don’t understand the value locked inside their own companies, nor do they comprehend that, as business owners, they control its value—regardless of the condition of the business.

The business value cycle

Lessons of the past


As an example, I always turn to my family. My grand father was a hard-working man. He survived The Depression. He was a relatively astute businessman, too, but he made a few mistakes, as we all do. My father would often retell a story of how my grandfather bought a nice apartment building in town. It made him a bit of money for a few years. After a while, there was a bad tenant who destroyed his apartment and drove away good renters.  Rather than address the issue head-on, my grandfather grew apathetic, meandered into denial and, eventually, abandoned the building altogether, decrepit.

My father could never understand my grandfather’s behavior.  He always noted that if my grandfather had sold when the trouble started, he could have recouped a great deal of his original investment, maybe even made a small profit. As strange as the story sounds, this is what I see happen to far too many businesses. Their owners choose to let their businesses wander aimlessly or spiral downward rather than address the real-but-fixable problems that could make them attractive acquisition targets.

Why don’t more businesses sell high?


At CEO Equity, we know these stories, because we have been there ourselves. I started a defense IT contracting company in 1998 and built it from a one-man show into 100-person team.  In 2010, for a number of factors, many of them personal, I sold my company.

The lessons I learned in 2010 are why I founded CEO Equity: to help sell-side business owners understand where value is hidden in their companies, and to show them how to position their companies to be as attractive as possible to achieve maximum value when it comes time to sell.

Planning for maximum value


At CEO Equity, we focus on the “selling high” half of that time-honored strategy through what we call “value planning.” Value planning is different from growth and other sorts of business planning, in that it is all about getting the ducks in order within your business that will make it an attractive target for larger companies looking to acquire smaller ones.

We come on board, analyze and evaluate the various aspects within the business and establish time-defined, rational plan to prepare your company for sale—even if you have never had a thought of selling your company. The best time to plan for value is before an acquirer comes calling.

For business owners who have built companies from the ground up and are interested in maximizing the value of their businesses, there is no time like the present for value planning. It is the key to selling high.

 

 

 

 

 

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