You’ve built a successful company, and it’s time to move on to new things. Regardless of whether the business is acquired or opts for a merger, your goal is to realize the highest value.
If you wish to walk away now, you may certainly do so if you’re willing to trade off a higher business valuation for immediacy and ease. Should you be contemplating a sale of the company and wish to increase its value, it’s time to start structuring it for sale.
So what is structuring, and how do you approach it?
What Is Business Structuring for a Sale?
Certainly, structuring a business for sale includes optimizing revenue. Still, it goes well beyond that into other aspects of the company, including legal, key employees, operations, brand recognition, and working capital.
Let’s briefly cover each aspect.
Implementing Business Systems and Standards
Implementing systems that continually measure performance and adjust operations as needed to meet ongoing performance or financial targets is essential to structuring for sale. These systems provide ongoing updates as to current performance, chart that performance over time, simplify management transitions, and result in ongoing performance gains.
The company becomes standardized within itself, defining the benchmarks that matter, how processes are performed to meet those benchmarks, and better-defining company value.
Revenue
All interest in your stone fabrication business originates from the bottom line. If your company is doing well, it’s desirable.
Naturally, the keys to cost-cutting and improving revenue are hidden within that thing called your income statement, but there are some serious considerations before cutting. You’re looking to cut unnecessary expenses and waste, not save on or cut costs resulting from essential business operations.
Revenue increases will also result from increased sales, so if there is potential to improve sales before an acquisition quickly, get on it.
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Legal
Best reviewed with your attorney; the company’s legal situation must be solid. Ensure the formation documents or any operating agreement don’t present problems for someone acquiring the company. Check for liens, UCCs, IRS filings, and contracts with suppliers and employees, and the company is currently in good standing with the secretary of state.
If your legal situation isn’t impeccable, it will set off alarm bells with buyers and jeopardize the sale.
Key employees
No doubt selling a business makes employees nervous, and transferring your company with those employees instrumental to the company’s success maintains a higher price. Review employment contracts to ensure they transfer with a sale.
When you finally discuss your intentions with key employees to solicit their support, ask them to keep your discussions confidential. The talk of a sale with non-key employees could make for tremendous disruption.
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Operations
Operations are an essential component of the company, and potential buyers will want to see they are efficient and easily transferable to new owners. Having data on machine utilization will show buyers the effectiveness of company production. Make sure processes are documented and OSHA requirements are met.
Brand recognition
Great online reviews, an excellent website, effective marketing, and an attractive showroom will contribute to company value. A visible, well-known, and respected brand has incredible value for which buyers will pay a premium.
Data related to sales closing percentages, customer acquisition costs, and a complete CRM will contribute to your case for a higher sales price.
RELATED ARTICLE: Marketing Strategy 101: 6 Simple Steps Stone Fabricators Can Follow to Solidify Their Brand in 2023
Working Capital
How fast are you collecting invoices? Are your current assets greater than your current liabilities? Do you have a lot of loans finalizing in the next 12 months that could be refinanced into long-term liabilities? Have you been using long-term debt for equipment acquisitions and preserving cash?
These items contribute to how working capital will look to a buyer. Once a look-back period is negotiated, a peg will be set for working capital. The higher the peg, the more you stand to make.
It Pays to Structure for a Sale
Structuring your business for an eventual sale pays off even if the company isn’t sold. You’ll know the accurate picture of your company and its performance.
If you go into price negotiations knowing that the company has no legal jeopardy, working capital is solid, operations are efficient and documented, and brand value is strong, expect to receive a price premium.
A Consultancy Can Help Structure Your Fabrication Business
Structuring a business for sale might seem daunting for an individual business owner. There’s a lot to it, and you’ve spent your career aligning your business to your vision, not making it look like a perfect fit for someone else’s. But you’re not selling your vision; you’re selling what it has achieved.
Professionals know what others need to see to establish a more substantial and valuable market value for marketable stone fabrication businesses.
Grand Onyx helps stone fabricators grow their businesses and establish and grow their sale value. They establish the proven stone fabrication systems necessary for the company’s efficient management, measurement, and continual improvement and value growth.
When an owner is ready to enjoy the success they’ve earned, Grand Onyx ensures they go into negotiations with a business that is optimized for the greatest return.
Grand Onyx empowers stone fabricators to elevate above the countertop dust to view their business in a new light.
CLICK TO LEARN MORE ABOUT WHAT WE DO
Optimize your shop’s returns today and prepare the business for its maximum value at sale tomorrow. Let’s talk. Visit https://grandonyx.pro/contact or call 419-208-9082.
