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Primp The Bride How To Prepare Your Business For Sale

Sep 16, 2009

 

“Primping the Bride”

 

A few months ago as a daddy I was able to walk the most beautiful bride down the aisle.  My 24 year old daughter got married and I had the honor to escort her to the groom, and give her away with our blessings.  From the time they are born we, their parents think about the day our children will get married and try to prepare them for that day.  We teach them values, protect their honor and pray for the spouse that one day will become part of our "extended family". My prayers were answered and I not only got a new son-in-law, my daughter married a wonderful man.
 
When we think about our businesses the thought of selling is sometimes put off.  We may wish to purge the business from our lives at some point due to stress, but usually they are also our "babies".  We nurture them, mold them and hope one day a suitor will come to pay the price to take control of our company.
 
A couple of years ago I spoke to a large group of business owners in Cabo San Lucas on the topic of "Primping the Bride", in terms of preparing their business for sale. I used the analogy of how the bride takes hours or even days to prepare herself for her wedding day.  Her nails, makeup, hair, just the right gown, shoes, veil and even her undergarments, all get fussed over and chosen to be the "perfect" one for her wedding. Business owners also need to take time to prepare their company so that it looks its best, when the suitors come a calling.   

Preparation for the sale of a business entails making sure all the legal issues are settled, agreements located or created, accounting records cleaned up and prepared for the auditors, assuming audits are not occurring currently.  Many other decisions weigh on the owner as how to make sure the "courtship" of the suitor does not leave the "bride" at the alter.   

The buyer's due diligence teams will scour the books, review the inventory valuations, assess the internal controls, competition and systems, processes and staff you have assembled.  It will be the time when appearances will be judged, but your business will be scrutinized more thoroughly than the human bride ever will be.
 
As I was helping one client prepare their business for sale, I insisted that they took a physical count of the entire inventory and then made sure that each item was accurately valued.  We found that the actual value of the inventory was worth much more than the company had been carrying on their balance sheet.  The effect of this change also increased the profits as we adjusted the inventory upward.  The cash the seller was able to derive from the ultimate sale rose substantially due to both of these changes, as it increased the EBITA or cash flow derived from the business, as well as the physical assets.
 
Where are you with respect to your business?  Have you started the process to "Primp" your company? If you need help making sure that the most critical items are attended to so that your trip down the aisle doesn't end up without the marriage (sale) taking place, let me know.

 
My years of experience and that of my B2B CFO® partners can assure you that we know what needs to be done for the suitor to buy with confidence. Your company will not only look its best, but the infrastructure will be in place to maximize the cash flow now and demonstrate that the value supports the asking price.

More from David L. Odom…

About the Author

Dave is an experienced CFO / Exit Planning Consultant with over 30 years of expertise serving small to mid-ranged companies in finance and accounting. His background includes working in public accounting, for a Fortune 100 construction company, founding and managing a CPA firm for 15 years, prior to purchasing an international brokerage company and acting as its President and CEO. Recently he served as the Executive VP and CFO for a $35 Billion real estate brokerage franchising company on the West Coast, which accounted for approximately $900 Million in commissions and $40 Million in franchise fees.

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