16 Dec Key Steps for Sellers to Position Their Business for a Fast Exit
In our latest Business Brokerage Press webinar, experts Morgan, Keith, and Hannah from Chinook Business Advisory shared critical insights into how sellers can position their businesses for a fast, successful exit. As seasoned business brokers and M&A advisors know, the process of selling a business involves a complex interplay of strategy, preparation, and timing. This article builds upon our previous discussion in Exit Planning and the Three Types of Sellers, offering a deeper dive into the specific steps sellers should take to ensure their business is prepared for a quick sale.
The Buyer’s Perspective: Why Positioning Matters
From the buyer’s viewpoint, purchasing a business is a significant personal and financial risk, often being a once-in-a-lifetime opportunity. For that reason, buyers want to proceed with confidence. Sellers must take proactive steps to ensure that their business is not only attractive but also stable and low-risk. These steps—prioritizing pre-diligence, reducing perceived risk, and engaging with the right professionals—are essential to position the business for a smooth transaction.
Step 1: Prioritizing Pre-Diligence
Sellers should approach the process through the buyer’s lens, identifying and resolving potential issues well before going to market. Buyers want clarity and confidence that there are no hidden surprises in the business.
The Chinook Business Advisory team discussed how advance preparations can prevent delays and complications down the line, improving the likelihood of a smooth sale. This should be emphasized to your clients.
Step 2: Reducing Perceived Risk
Minimizing perceived risks can be a game-changer in enhancing the attractiveness of a business. Whether it’s high revenue concentration, potential legal liabilities, or issues with employee retention, these factors can discourage prospective buyers. Sellers should address these risks before the business goes to market.
- Revenue Concentration: If a business depends too heavily on a few clients or customers, this concentration is a red flag. Diversifying the client base can help.
- Employee and Customer Contracts: Solid, enforceable contracts provide stability and assurance to buyers.
- Legal and Financial Liabilities: Addressing any outstanding liabilities and resolving potential legal issues can make the business more appealing.
Step 3: Engaging with the Right Professionals
One of the most critical aspects of preparing for a business sale is assembling the right team. Of course, business brokers and M&A advisors are a given. Your clients should be reminded that early engagement with accountants and legal experts is essential too. These professionals all play essential roles in the process. They can help navigate the complexities of the transaction but also assist in crafting an exit strategy that aligns with the seller’s goals while making the business more marketable.
