If your objective is to sell your company for the highest possible price, then you must build reliable systems that can sustain the growth of the business. Before we get started on discussing this important value driver, here are a few quick definitions:
Look at your business from a buyer’s perspective. If you leave shortly after a sale, then what remains? If the answer is top management and highly efficient business systems, then you can be more confident that you will be able to get top dollar for your business.
In addition to the business systems related to revenue and expense, some systems are related to customers, such as tracking systems, and the delivery of your products and services such as distribution systems. The documentation of these systems and their related processes and procedures is important to ensuring that quality and consistency can be maintained after the sale. They also signal to the buyer that everything is in place for their future success. Some examples of items worthy of documentation are:
Again, put yourself in the shoes of a would-be buyer. Buyers want assurance that the business will continue to move forward after new ownership and that operations will not break down if and when the former management leaves. Obtain this assurance when there are documented systems in place that will enable the buyer to repeat the actions of the former owner to generate income and grow the business.
Obviously, appropriate systems and procedures vary depending on the nature of a business. But at a minimum, document those resources and activities necessary for the effective operation of the business. After you have built reliable systems to sustain the growth of the business, the next value driver to focus on is establishing a diversified customer base. We will discuss this value driver in detail in the next Exit Planning Review™ Article.
If you have any questions about increasing the value of your business prior to your exit, please contact us to discuss your particular situation. We can help guide you through the process of identifying the current value drivers in your business and creating a road map for increasing value to meet your overall exit objectives. Download the Top 10 Destroyers of Value whitepaper.
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