How do you get a large company to buy your small business? In this video interview with Matthew Lesko, I’ve shared some of my tips & tricks.
In many ways, selling a company is like selling a house. My number one recommendation is to make your company easy to buy. How can you do that? Here are some tips and tricks:
Get your books in order: Have good financials ready before you look for a buyer. Best of all is to have financial statements that have been independently audited. This is like having a home inspection done before putting your house on the market. Large companies—“fat cats” as Matthew Lesko calls them—are always worried about risk. An audit significantly reduces the risk for a buyer of your enterprise.
Who is instrumental in the success of your company? If it’s just you, that adds risk to the company. Make sure there are other people that can take over the operation when you leave. It should be clear to a buyer that someone else can run the business. You may offer to stay on for a while yourself, which can make the purchase more attractive, but the buyer will know you won’t stay forever. So succession planning should begin before you sell.
Just as you would repair faulty wiring or replace a broken window before having an open house, you should fix liabilities in your business before approaching a buyer. Have you paid the appropriate taxes? Do you have the proper licenses? If you there are liabilities you cannot fix, perhaps because the cost is too high, be sure to identify them to the potential buyer early on. Large companies are experts at identifying risk, so it is much better to reveal any liabilities up front rather than try to hide them.