Selling a business can be the single biggest transaction a person ever completes. A successful organization may be worth seven figures or even more. Therefore, someone who has invested their money or years of their time into the creation or improvement of a business wants to maximize the returns that they earn on that investment.
Whether there is a competitor in the local market who long ago expressed an interest in buying the company or a business owner intends to openly list the company for sale to the public, there are certain issues that they may want to address first to maximize the final sale price of their company.
Minimizing the loss of talent
Any major transition at a business tends to result in some workers deciding to leave the organization. Not every company survives an acquisition, and the new owner might want to replace some of the existing employees with professionals they know personally. People dislike the instability that comes with a business transaction and might plan to leave the company when current leadership announces a pending transaction. Business owners may want to speak directly to key workers and possibly even negotiate new contracts with them to incentivize them to stay.
Providing training and guidance
It can be very difficult for a new business owner to step into someone’s role as a manager and daily operations specialist. Even if they have experience running a business or working in the industry, taking on so many responsibilities at once could lead to oversights. In addition, depending on the new owner’s prior experiences, confusion and consequently frustrations among the employees can occur with abrupt changes to the business’s policies and procedures. The owner preparing to sell the business may want to create a succession plan that involves training materials for the party taking over their role detailing those policies and procedures. Providing a breakdown of every task someone completes each day and information about key job functions may help keep the business solvent, the new owner feel more confident about stepping into their new role, and employees on board with the new leadership.
Addressing organizational liabilities
Perhaps there is still a debt owed on manufacturing equipment, or maybe a former client threatened to sue the company over a recent dispute. Any potential financial liability could affect a buyer’s interest in the company and the price that they would pay. Paying debts can improve the fiscal status of the company could be a smart move. So could proactively resolving disputes with outside parties that could potentially lead to litigation.
When a business owner takes the right steps before they list their company for sale, they may make the business more attractive to a prospective buyer and mitigate challenges down the road. Seeking personalized legal guidance can help to ensure that a business owner’s needs and goals are realized as consequential transactions unfold.