Give Yourself a Runway
Most surveys of owners find the same thing. Nearly everyone agrees they should have an exit plan, and roughly three in four don't. The ones who start a year or two early have more choices and usually better offers.
A runway lets you fix problems on your schedule instead of explaining them to a buyer who is already nervous.
Make the Books Match
A buyer's lender and accountant will compare your tax returns, profit and loss statements and bank deposits. When those three tell different stories, the deal slows down and trust drops.
- Close each month on time and reconcile every account
- Separate personal spending from company spending, or at least track it
- Keep receipts for anything you plan to add back
- Run all income through the books, since only proven profit counts
Hiding income to save on taxes is an expensive trade. At two to three times cash flow, every dollar left off the books can cost two or three dollars of price.
Step Back From the Daily Work
A buyer asks one question about you above all. Will the company still work when you are gone? If every big customer calls your cell, and you write every estimate, the answer looks like no.
Think in terms of people, profit and process. Train a manager or lead to handle customers. Write down how jobs are priced, scheduled and checked. Then take a real two week vacation and see what breaks.
Spread Out Your Customers
If one customer is more than about 15 to 20% of sales, buyers often take that share off their offer or walk away. A general contractor who sends half your roofing jobs is a risk, not an asset, in a buyer's eyes.
Spreading that work takes time, which is another reason to start early. Written agreements with key accounts help too.
Check Your Lease and Contracts
Look at what a new owner would actually inherit:
- How many years are left on your lease, and can it be assigned?
- If you own the building, is the company paying market rent?
- Do supplier, customer and franchise agreements allow a change of owner?
- Are licenses and permits in the company's name or yours?
Rent below market looks like a perk, but buyers price the company at market rent, which lowers what they will pay. If you own the property, you can also keep it and become the new owner's landlord.
Keep Results Steady
Buyers dislike surprises in either direction. A slide during the sale scares them. A sudden jump right before listing makes them suspicious. Keep running the company as if you plan to own it for years.
Build the Team That Sells It
The CPA who does your annual return may not be the right person for a sale. Line up an accountant who knows deal taxes, an attorney who reads purchase agreements, a financial advisor and a broker.
Taxes on the gain often cost more than any fee, so planning ahead pays.
Arizona adds its own closing steps, from TPT to the Corporation Commission. Our sale paperwork guides explain them, starting with Arizona TPT successor liability when you sell a business.
Then read how buyers price a small business and how a sale unfolds. To find out where you stand today, send the form or call (480) 555-0124.