Key factors to consider before selling your business.
Many company owners are considering the timing of selling their business. This question has many possible answers, some are objective and true for every company and some are subjective. If you are the owner of a business who considers selling it some point in the future, you should take into consideration several parameters that will enable you to sell your business for maximum value. To learn more about business for sale in Israel, contact us.
Business for sale in Israel: Enhance the value and then sell
The natural preference for many company owners is to invest their time mainly in daily operations while investing less attention on activities that will enhance value and differentiate the business from its competitors – crucial topics when selling a business. When selling a business, the potential buyer will examine the opportunity through business measurements such as growth potential, anticipated future value after the acquisition, while looking at other alternatives. In addition, the potential buyers will examine possible synergies between their company and your business, such as enhancement of value, adopting new technologies, gaining expertise and unique knowledge, increasing domination in specific market segment and more.
If selling the company is not urgent and you have the time to invest in enhancing the company’s value before selling it, you should shift your perspective to start thinking as your potential buyer.
The process of enhancing your company value in order to make it more attractive from the potential buyer’s perspective includes several possible actions, the following are some of the most common examples:
- Management team – ensuring the existence of a capable and experience management team to run and lead the company after the acquisition, will create confidence regarding the future.
- Decentralization of customers / products / services – dependence on a single customer, product or a service, usually perceived as a risk factor from the potential buyer’s perspective.
- Reasonable profitability in comparison to the industry standard – a skilled buyer will always examine your company’s profitability in comparison to the standard in the industry your company is related to.
- Organized financial and management reports – presenting organized, accurate and quality financial and business data management will generate confidence in the business.
- A clear growth strategy – one of the main topics that every buyer is interested in: what is the company’s growth potential after the acquisition?
- Revenue and profit trend – if possible, you should avoid selling the company if the revenue and/or the profit are not growing in the past 2 years are not in a growth trend.
- Pipeline –a substantial pipeline of orders generates confidence and will support a high value deal.
- IP / brand – Patents and unique know-how, alongside a strong brand, will strengthen the company’s value from the potential buyer’s perception.
The above examples are general and are only part of the options to enhance any company value. Every business owner should map and identify topics that are relevant to the industry he operates in and more accurately to the business he owns.
Many company owners, who are interested in selling their business or joining forces with a strategic partner, contact us and ask if their company, at its current state, can expect a high value transaction. At Head-On we offer a non-obligation first meeting with one of our expert consultants. During this meeting and based on additional information about your company, we will be able to help you take the right decision: sell your company now or first enhance its value and then sell.