Build a strong business now for a successful sell later
Huffington Post contributor Jack Garson highlighted a few tips for entrepreneurs to keep in mind when they are considering selling their business.
As co-founder of a law firm, Garson provides legal counsel to companies, and said that it's important to build an organization that can thrive without you – the owner. While it can be fun to play Superman, and know that everyone relies on you, should any M&A opportunities come along, the transition can be difficult if the business is unable to run without you.
"Instead, hire the most talented people you can afford and put them in critical executive roles," Garson wrote. "Then let them take on larger roles as your business grows. Now a buyer can purchase your company, keep the executive team and plug in their own new leader. The purchaser will have a viable, and likely improved, business."
While some entrepreneurs might not like the idea of their company functioning without them, Garson explained that thinking of profitability in the long-run can help business owners get over that fear.
Another important step is to make money. While seemingly simple, Garson said that buyers want to see that a business has been profitable and can maintain those levels. This is one area where financial records will be beneficial, as they will help ensure an accurate company valuation that will jumpstart the merger or acquisition process.
Having a competitive edge is Garson's third tip to keep in mind. Startups especially need to find a way to put themselves ahead of other companies, as they are often lesser known and not always on the national scale.
The mergers and acquisitions process doesn't need to take years, and when entrepreneurs have taken the time to prepare and properly align paperwork, there will be even less difficulties along the way.