Does your company have curb appeal?

Remember the first rule of real estate? Location, location, location. Add “curb appeal” to the top of the list. That applies to home and office. So when you’re thinking about selling your company, you need to think about how the place looks when it’s time to show it. My book, How to Sell Your Privately Owned Company, offers tips to help freshen up your business’s curb appeal. Here’s an excerpt:

Think about your house: the place you may have left several hours, unmade beds, and unfinished projects ago. Would it look appealing, smell appealing, feel appealing to a prospective buyer? Would it be the kind of place that someone would want to raise a family in, bring friends to, feel comfortable in?
Could it sell itself? Or would you need to do a little explaining, a little blushing about the peeling paint, the leaking faucets, the unkept lawn, the cracked window, the noisy neighbors? Would you have to make excuses for things? Justify your asking price? Take less than you intended or needed?
Would it “show” better if you had a little time to get it ready? Sure.

Time to fix things up

Jeffrey D. Jones, president of Advanced Business Brokers in Houston, says, “It generally takes, on average, between five to eight months to sell most businesses. Keep in mind that an average is just that. Some businesses will take longer to sell, while others will sell in a shorter period of time.”

Many businesses may take up to one year to sell

However, the reality is that many business owners really don’t do anything to prepare for the sale until a few weeks or even days before putting it “in play” on the market. They mistakenly think that the business can sell itself, much in the same way that a home is bought merely after a drive-by.
What would a buyer see in a drive-by of your business?

What would his first impressions be of your:
• Parking lot. Is it in poor repair? Are the shrubs overgrown? Do you have enough space for employees, handicapped persons and visitors? Is there trash on the lot’s surface?
• Entrance way. Has it been swept, shoveled? Does it give a neat appearance of your business? Is it easy to find from the parking lot?
• Reception area. Is there one? Is it neat and clean? Are visitors greeted quickly and with courtesy? Who else is in the waiting area?
• Employees. What are they doing? Are they busy, talking, waiting around, drinking coffee? Do they acknowledge the visitor? Are they smiling? Are they neat, clean, well-presented? Are their desks and filing areas neat or cluttered?
• Cosmetic appearance. How is the lighting? Do the walls need paint? Is the carpet worn? Does everything look “dated?”

You’ll find a checklist in the book to review the points you’ll need to review, as well as many other secrets to selling your company effectively.

Copyright © MMIX by ERV Productions Inc. All rights reserved. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a data base or retrieval system, without prior written permission of the publisher.

Eric R. Voth has been a successful business owner and seller since the 1970s. Among other enterprises, he is currently owner of ERV Productions Inc., and author of How to Sell Your Privately Owned Company.

Confidentiality matters

As you prepare to sell your business, you will be gathering and processing a great deal of information about your business, including some very sensitive information that could be ruinous if it fell into the wrong hands. For this and other reasons, you need to have a team of advisors that you can fully trust and who can protect the confidentiality of your business transactions. How to Sell Your Privately Owned Company helps you define your needs and fulfill them:

With all advisors you choose, you’ll want to make sure that you’ve selected ones whom you can trust and respect – ones you are comfortable working with and who are comfortable working with each other.  You need to make a subjective judgment that the “chemistry” between you and each of them is “right.” Most deals of your size may take up to a year to complete, so you want to make certain that there is a mutual level of comfort and a key goal shared by all the players.

You’ll also want to discuss the subject of confidentiality with all of your outside resources, especially your intermediary. Because he will be contacting many companies (and giving them financial details about your business), you will need to know how he plans to contact prospective buyers and still maintain your confidentiality.

At some point in the process, a prospective buyer will be asked to sign a Confidentiality Agreement or a Non-Disclosure Agreement. These can be written very simply or in tedious detail. The choice is yours. Your intermediary probably has one that will serve your purposes.

Copyright © MMIX by ERV Productions Inc. All rights reserved. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a data base or retrieval system, without prior written permission of the publisher.

Eric R. Voth has been a successful business owner and seller since the 1970s. Among other enterprises, he is currently owner of ERV Productions Inc., and author of How to Sell Your Privately Owned Company.

Three crucial players help you sell

Selling your business is a daunting task. You don’t want to make a mistake with possibly the largest transaction you’ll ever be part of. Choosing the right pros to guide you through the process is crucial. In How to Sell Your Privately Owned Company, I spell out how to go about finding your three most important pros:

Something that you may have in common with other business owners is your dislike of paying professional fees for accountants, attorneys and consultants. You want to engage the services of these professionals only when it is “absolutely necessary.” Selling your business is one of those absolutely necessary times, because the sale of your company could well be the most important economic decision you make in your entire life. In fact, you will need to budget for the services of three selling professionals:
1. Someone to make it legal.
2. Someone to make it lucrative.
3. Someone to make it happen.

Copyright © MMIX by ERV Productions Inc. All rights reserved. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a data base or retrieval system, without prior written permission of the publisher.

Eric R. Voth has been a successful business owner and seller since the 1970s. Among other enterprises, he is currently owner of ERV Productions Inc., and author of How to Sell Your Privately Owned Company.

Treat it like the biggest sale of your career

Treat it like the biggest sale of your career because that’s exactly what it is.

Does your business have some type of advertising piece or sales slick or brochure used to entice customers to buy your product or service? A Web site? Certainly. The days of “word-of-mouth” advertising are virtually nonexistent. So are the days of word-of-mouth business sales.

For the same reasons that you possess printed and online materials to entice prospective customers or clients to do business with you, you need similar tools to entice prospective buyers to look at your company when it’s for sale.

As you’ve read earlier, the potential buyers of your business will be smart, savvy and sophisticated. They are busy, interested in a smooth transaction, and probably looking at your company as well as several others. They demand information, but don’t have time to dig for it. They will be impressed by your ability to present your company in a well-thought-out, well-documented package – offering answers to their questions about its performance, people and plans.

One recommended way to do this is to prepare a sales tool for your company. Your intermediary is experienced and skilled at putting together such a package. A Preliminary Prospectus is a document the buyer can review before receiving a copy of your Management Book – a more formal document. It needs to include the following sections:

• Sales Pitch
• Photographs/Video on CD (optional)
• Company History
• Selling Price and Terms
• Company External Environment
• Employee Information
• Asset Assessment
• Environmental Issues
• Client List (generic)
• Outstanding Contracts or Agreements
• Location(s) Description(s)
• Plans for the Future
• Supporting Financial Documentation
• Product or Service Literature

Copyright © MMIX by ERV Productions Inc. All rights reserved. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a data base or retrieval system, without prior written permission of the publisher.

Eric R. Voth has been a successful business owner and seller since the 1970s. Among other enterprises, he is currently owner of ERV Productions Inc., and author of How to Sell Your Privately Owned Company.

Who might want to buy your business?

Could employees be buyers?

Certainly. The IRS even encourages it. In my book, How to Sell Your Privately Owned Company – Baby Boomer’s Edition, I list several reasons why employee buyouts make sense:

• It will generate goodwill in the work force.
• You’ll definitely be viewed as a good guy.
• You’ll be entitled to some healthy tax benefits.

However, don’t rush out and put a FOR SALE notice on the employee bulletin
board just yet.

Because employees usually don’t have enough money to pay cash for your company, employee buyouts are subject to certain risks. The biggest of these is the deal falling through if the employees can’t agree to the purchase price or the terms. If the deal fails, you will probably encounter a strained relationship between yourself and the work force. Some employees may leave. Others won’t trust you. If you end up selling to an outsider, many employees will treat the new owner poorly, because they may be convinced that the employees should be the “real” owners.

Employees will also want you to sell the company at a reduced price. They may also request other concessions, and more time to come up with the funds. They will literally “know your business,” because all aspects concerning your financial profile will be available during negotiations.

Even the most loyal employees can become greedy, envious, or angry. If the deal is successful but the business is not, the employees will blame you – and in the worst-case scenario, take you to court for a fraudulent conveyance action.

There are other potential buyers, of course.

Other potential buyers include:
• Customers
• Suppliers
• Competitors
• Individual Investors
• Larger Diversified Companies
• Private Equity Groups
• Industry Consolidators

Each has advantages, disadvantages and limitations. Learn about them and more in How to Sell Your Privately Owned Company – Baby Boomer’s Edition, by Eric R. Voth.

Copyright © MMIX by ERV Productions Inc. All rights reserved. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a data base or retrieval system, without prior written permission of the publisher.

Eric R. Voth has been a successful business owner and seller since the 1970s. Among other enterprises, he is currently owner of ERV Productions Inc., and author of How to Sell Your Privately Owned Company.