by Don Moore, Partner, Decision Associates M&A, LLC

businessman looking to drawing success scheme on wallFor most business owners, there comes a time when you ask yourself, “is now the best time to sell my business?” Right now, our firm has more prospective buyers than we do owners ready to sell. Part of the reason for this is that owners typically underestimate the time-frame needed to prepare for a sale. In fact, at least half of the sales our firm has transacted could have sold for 20 percent more if the owner would have prepared sooner and addressed relatively simple issues. Consider this: the selling price is driven largely by trailing one to three years EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization). This means that many companies miss opportunities to grow that number. Interestingly, many of the actions are not complex, but they take some time. As BJ Lechner, my partner in Decision Associates M&A, LLC, noted recently, if buyers would contact our firm about two to three years ahead of their intended exit date we could help improve not only EBITDA, but a number of other issues that affect “the multiple.”

Remember, if you are considering a sale you don’t need a list of 20 prospective buyers, but rather a highly qualified few. Our approach is to build a profile of the business and its assets so that we can match up buyers who value those same characteristics. We have successfully employed this process for a wide range of companies in our region – from Abbatron, Forquer Group and Great Lakes Cast Stone to Performance Castings, Pulakos Chocolates, Rechtenwald Architects, and Stefanelli’s Candies.

The majority of our clients live where their companies are located, in communities with family and friends who rely on the business for their livelihood. Our experience and referral networks at Decision Associates M&A, LLC, position us well to find prospective owners who will keep the company at its current location and sustain jobs for loyal employees.

What Do Real Buyers Really Want?

The top priorities for qualified buyers with ready capital who are actively seeking to acquire a business include:

  • Strong earnings
  • Proprietary product/intellectual property or process for proprietary product/intellectual property
  • Diverse customer base and strong market presence
  • Deep management team
  • Sales & marketing team and processes
  • Updated facility and technology
  • System and technology infrastructure
  • Environmentally sound site

With a generation of owners ready to retire, buyers will have plenty of options to consider. The question becomes how your company compares to the opportunities available in the market. That is the reason that planning ahead for your sale is so critical.

Special Note: NWIRC and Decision Associates M&A will host a special program, “Position Your Business…How to Add Value by 20%”, on April 19th from 3:00-5:00pm at Knowledge Park in Erie. Participants are encouraged to stay for networking, hors d’oeuvres, and refreshments following the program. Click here for more details and to register.

Don Moore is a Partner, along with BJ Lechner, at Decision Associates M&A, LLC. Mr. Moore founded Decision Associates in 1984, and since that time, he and his team have helped hundreds of businesses develop strategies for growth and improvement.