Preparation Needed for Selling a Business

So you’ve decided it’s time to sell your business. You may want to retire, or you simply want to unload the company before the market turns against you. How do you go about finding someone to actually buy your business?

Determine Your Business’ Valuation

Before you can sell anything, you have to determine its market price. If your business is privately held, you can value the company based on annual revenue and earnings, combined with physical assets – such as real estate and equipment, and then deducting debt. Patents and existing partnerships should also figure into this total. If your company is already publicly traded, then its value has already been determined for you by its market capitalization, and you won’t be able to sell right away unless you are in possession of the majority of outstanding shares.

Either way, as a seller you should ask for a healthy premium over its current valuation, citing future earnings and growth potential. It’s not unusual for larger companies to pay over 50% of the current “market value” in an acquisition. If in doubt, hire a business broker or mergers and acquisitions professional to help you get the best deal for your company.

Prepare a Selling Memorandum

Before you reach out to any of these prospective buyers, you need to prepare a selling memorandum, or “business plan in reverse”. This is intended to clearly outline all the main details that buyers would request.

These would include, but are not limited to -

• Your company’s history, structure, products and operations
• Your business’s valuation and asking price
• Your industry peers and competitors
• Your employees and leadership structure
• Past financial statements
• Future guidance and projected revenue and income
• Potential problems within the company (this is very important, as any attempt to cover these up could be viewed as fraud)

The selling memorandum is an extremely sensitive piece of information, and you would be wise to have prospective buyers sign a non-disclosure agreement before reviewing it.

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Importance of Developing Leadership Skills

What makes a good leader? The answer varies widely depending on who you ask, with researchers disagreeing on the critical components that go into the most effective corporate chief. But there are traits they do agree on, including personality components and acquired skills. Some believe even the situation for leadership itself has a bearing on the effectiveness of the leader.

Important Leadership Skills

• Commitment, resolve and perseverance – driving every aspect of the organization toward a singular unified purpose.
• Risk-taking – breaking conventions and developing new products and services to establish marketplace dominance (and possibly even create a unique market).
• Planning – though a leader typically doesn’t get too involved in the details, he or she must orchestrate a high-level plan that drives everyone toward the unified goal.
• Motivating – an effective leader must be able to encourage contributions from the entire organization, navigating the specific motivators of each individual or group to push the right buttons and inspire employees at every level to achieve not only their personal best but the best for the organization as a whole.
• Communication skills that rely on active listening – far more than just being able to speak and write persuasively, leadership communication skills incite others to work toward the stated goal in line with the path the leader has chosen.
• Possessing or obtaining the skills required to successfully achieve business goals – bringing a unique knowledge set to the table or acquiring it personally or through employees and other subordinates.

What Makes These Individual Skills So Important?

First, a distinction needs to be made: the difference between a leader and a manager. A leader is someone who does the right thing, whereas a manager does things right. Or to put it another way, management is an occupation, leadership is a calling

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