Q. I want to sell my company in 2 years, what should I do to maximize the value it might sell for?
A. First and foremost, lead your company well in a way that creates value today and in the future for your shareholders. By “well”, I mean
* Pursuing a balanced set of current business and new growth initiatives that will drive good near, mid, and long term results
* Executing well by getting the “5 rights” right – the right resources in the right place, doing the right activities, at the right time, with the right cost structure
* Reliably supplying in-spec products and services to your customers at a fair price for both you and your customers
* Thinking ahead and externally to position your company for the future and to take advantage of good opportunities that may arise
* Maintaining or moving to a healthy balance sheet to both yield pricing flexibility in bad times and allow your company to exploit good opportunities
* Motivating your people to take pride in their work, stay, and deliver more
There is an alternative school of thought that says a seller should “pretty up the pig” for sale. This approach generally involves juicing up financial results via exceptionally high price increases to customers with no immediate switching options, slashing SG&A and R&D, deferring capital expenditures and dramatically reducing net working capital, initiating last minute licensing discussions with numerous partners to show high potential deal flow, and other tactics. The problems with this approach are that buyers may be smart and that the company may not sell fast enough. With pretty up the pig,
* Buyers may see through the seller’s tactics in due diligence and become very suspicious or even walk away
* By slashing costs and capital or souring customer relationships, you may have eliminated the very synergies that many buyers had hoped to achieve by acquiring your firm
* If the selling process drags out or is interrupted by external economic factors, the seller could be stuck with a company that has declining financial results, poor customer relationships, few innovative new products, high personnel turnover, and a need for significant near term investment. Now that’s a hard company to sell!
There is an alternative school of thought that says a seller should “pretty up the pig” for sale. This approach generally involves juicing up financial results via exceptionally high price increases to customers with no immediate switching options, slashing SG&A and R&D, deferring capital expenditures and dramatically reducing net working capital, initiating last minute licensing discussions with numerous partners to show high potential deal flow, and other tactics. The problems with this approach are that buyers may be smart and that the company may not sell fast enough. With pretty up the pig,