This article was originally published at www.ypo.org
Learning about positioning your company for sale and maximizing exit value is about as important as it gets. If you decide to sell, you can realize far greater value; if you choose to keep the company, you can still have a more profitable asset.
At Stax—where our clients include more than half the world’s top 25 LBO funds and family businesses considering change of control—we see great interest in preparing for a sale or a transition of generation, and we’re increasingly asked to help prepare companies for sale.
Based on 20 years of experience advising on the buy-side of commercial due diligence and helping companies increase profits, here are six ways we see to increase exit value. These generally take just four weeks to six months to complete, and most have a significant ROI within three to six months if you choose not to sell.
These actions to position for exit and maximize exit value should be staged according to each company’s situation and needs. In fact, sometimes the potential value created is so great that owners decide to reinvest rather than sell. As for the best time to start preparing for exit, I tend to favor the proverb, “The best time to plant a tree was 20 years ago; the second-best time is today.”