Winners and Losers
There may be a large difference in the price obtained between the Losers (owners who continue to manage their business as before), and Winners,(those that consciously prepare it for sale).

 

How To Prepare the Business for Sale
Preparing a business for sale has four components:

Timing the sale during high growth or early maturity period
Managing for cash
Managing for growth
Managing so as to earn a higher multiple of earnings

Timing the sale during high growth or early maturity period
Every business will go through four stages of a life cycle. Please see the graph below.

The smart time to sell is when the business has completed its growth stage and is beginning to mature. At this point the business will realise its maximum value.

Too many owners try to sell at the decline stage because they haven’t recognized that their business is in decline. Sometimes the decline is due to increased competition in a mature and no longer growth industry. The competition is fierce and the margins low, hence the whole industry is in decline. Sometimes owners lose some of their passion for the business and […]