In a recent article in NJBIZ, Alan Scharfstein shared his top three recommendations to business owners considering a business sale or acquisition.
1 Understand the true value of your business:
the value of a company is more than just a multiple of revenue or earning; understand what value your company will bring to prospective buyers and how it will enhance overall earnings of the combined company. Be aware of what is your business worth to them, not to you!
2 Paint the house before you sell it:
Your business must be ready for a transaction. Business records should be organized and the documentation should support your claims. Be sure your operations and infrastructure are in good shape: Get rid of obsolete inventory and be sure your accounts receivables and payables are up to date.
3 Understand deal killers:
Ensure all trademarks, patents, copyrights are up to date and enforceable. Review key contracts with clients and vendors to ensure they are updated and assignable. Consider having key employees sign a non-compete or non-solicitation agreement. Address any potential legal issues, including environmental concerns or pending lawsuits.
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