18 Nov Around the Web: A Week in Summary
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A recent article from Kiplinger entitled “Has COVID-19 Put Your Plan to Sell Your Business in Limbo?” discusses what business owners can do while they wait for the time to be right to sell their business. Many business owners who were planning to sell in 2020 have been forced to put those plans on hold due to the COVID-19 pandemic. Rather than just sitting back, business owners should use this time to prepare the business for sale.
To set the table for a successful sale, a business owner can take several actions such as:
- Update your financial forecast and work to preserve value
- Be open to new opportunities and markets
- Gather all important business documentation
- Resolve outstanding legal matters
- Prepare answers for likely buyer questions
- Stay focused, enthusiastic and engaged in the business
A recent article from Entrepreneur entitled “Why This Franchisor Doesn’t Look for the ‘Perfect’ Franchisee” features Q&A with the director of franchise development for Great Clips, Inc. The questions focus on how the franchisor determines who will make a good franchisee.
Highlights from the Q&A include:
- Start with making a connection and getting to know the person
- Evaluate the prospect’s financial qualifications as well as if they are the type to follow a system and take/give direction(probably a good fit) or if they are more entrepreneurial and want to do things their own way (probably not a good fit)
- Take the prospect through the ins and outs of the franchise and let them talk to other franchisees
- Look for unique skills and traits that will make the franchisee successful and the brand stronger
- Know your deal breakers
A recent blog post from Exit Strategies Group entitled “Better to sell early in consolidation. Here’s why.” discusses the timing of selling a business in relation to industry consolidation. While it does vary depending on the business and the industry, in general it is best to sell early in a consolidation phase.
It is usually best to sell early because:
- Acquirers may be willing to pay a premium for the first acquisition in a geographic region
- Acquisition targets may have more say in what happens after the sale
- There may be more strategic acquirers
- Acquirers have yet to grow into huge entities that can hurt your position in the market
While industry consolidation can be important when determining when to sell, there are also other considerations such as:
- What is your exit time frame?
- Is your business performing well?
- What is the economic outlook?