Preparing Your Business for Sale

Earlier this year, it was announced that AMN Healthcare Services is acquiring Advanced Medical Personnel Services with a listed purchase price of $200 million. This is a common trend in the Staffing Industry. Many large firms look to acquire other staffing companies that will add to their already successful businesses. It’s a simpler way to widen geographic reach, add new services and penetrate other markets and niches. These companies are always on the lookout to invest in other businesses that are aligned with their business strategy.

If you started a successful business from the ground up, the best way to liquidate all your hard work and achievements is through selling. In fact, many business owners start their companies with the intention to eventually sell. Once you sell your company, you can decide to start another business or choose to retire with a hefty paycheck. Before you get to this, however, you will need to make sure that the business you’ve built is a good purchase, and convince buyers of its potential for growth in the future. Preparation is key, and below are a few ways to get ready when putting your business up for sale:

Exhibit Your Company’s Industry Standing

Don’t expect your business to be the only company that a potential buyer is looking at. You will need to be able to present an in-depth knowledge of the industry and establish its position compared to your competitors. Buyers will look at your company’s performance, the value you bring to your customers, and the features of your business that differentiate it from others in the same industry. Showcase your company’s best traits that others cannot duplicate, and create strategies to strengthen its market share in the future.

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Get Your Team in Top Shape

Your team is of high value to any buyer because they don’t just acquire a company, they acquire its people too. Take a look at your key personnel and see which ones contribute the most, which are ready to take on bigger roles, and which ones are lacking in terms of performance. Assess whether you will need to hire new members to round out your team, or to let go of those who do not perform. If possible, further their training and start implementing future plans for when the business moves forward. A proven team that is efficient and productive lessens the risk of problems once ownership of the company changes, and this is an attractive feature for any buyer.

Establish Your Company’s Ability to Scale

Companies make acquisitions with the intention to grow their business, and your company’s potential for expansion will be examined by any potential buyer. Evaluate your current business and determine its opportunity for development. Keep systems, infrastructure, and strategies in place that are scalable as the business continues to grow.

Streamline Your Operations

Aim for a high level of autonomy in your systems and processes if you are planning on making an exit from your business. Companies that rely heavily on its owner for sales and day-to-day operations to succeed are less valuable to buyers. A business that continues to function efficiently even without your leadership is more appealing for bigger businesses to acquire, as it will make integration easier in the future. Before going to market, streamline your operations so that the business will continue to function as well as it does even without your leadership. Make sure to get your systems and processes in order, apart from keeping your team up to speed.

Articulate Financial Health and Organized Paperwork

It is imperative that you can readily present financial statements to your prospective buyers depicting strong financial health. Show that your company is efficient and fiscally responsible by organizing your books and having your financials audited before putting your business up for sale. Buyers usually look at detailed financial statements from at least three years prior, so ensure that all income and spending are accounted for. Remove any unnecessary spending such as personal expenses from your books as this may result in questioning from your buyer.

Learn Similar Valuations in Your Industry

It’s not unusual for owners to expect a particular selling price when they decide to sell their business. However, keep in mind that all businesses are different and valuations vary even within the same industry. There is a multitude of factors that determine your company’s valuation, and the best way to ascertain that you are getting the right price is by consulting with an expert, typically an M&A advisor.

When you’ve worked tirelessly to build your business, it’s only natural to want to receive the highest possible amount for it. At the end of the day, what’s most important is to be able to show your buyer your vision for the business and to justify its future through its credibility in the past. If you are able to do this, you can be sure to exit with a hefty paycheck in hand.

MORE: Why deals fall apart

Eric Allison

Eric Allison
Eric Allison is managing partner of Golden One Ventures, a boutique M&A firm catering to the middle market for the staffing and recruiting industry. He can be reached at eric (at) goldenoneventures (dot) com.

Eric Allison

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