I’m ready to get out of this business!
Dear Ken Keller,
For the first time in my life I feel like I am getting older (not old!) and as much as I love this company I have built, I want to get out.
I am sure I should have been thinking about this a long time ago, and doing something about it. But it is what it is. So, what do I do to get started? — Dave L.
When you sell your company, you will do so to either a financial or strategic buyer. The financial buyer wants to buy your company for the lowest possible price but will pay more if certain things are in place.
The second buyer is strategic; this could be a competitor to you and will pay for something you have they don’t (a brand, a distribution channel, a business model. technology) or they want your client base and will fold most of the company (accounting, etc.) into what they already have; as in, there is no need for two accounting departments.
Or, it could be a company that wants to get into your market space but knows that buying is faster and less trouble than building something from scratch.
In either case, there are some critical things you need to do to maximize your walk away check.
The first is you should have the best possible talent you can afford on your team. Assume the buyer walks in and doesn’t know your industry; they can learn it but in the meantime they expect a team to be in place and running the business regardless of ownership.
The second is to have a strong business model. The best business models earns profitable revenue 24/7 (when you are sleeping).
The third is that the business is scalable; growth occurs without adding the same proportion of expenses (usually headcount) and other overhead.
Any buyer is going to want to see a profitable company with a track record, two or three years, of growth, positive cash flow and preferably, no debt. Every seller will want full asking price, in cash, at the close of the sale. Reality will occur somewhere in the middle of these two scenarios.
Getting ready to sell your company will take time and a plan. You will need to make some tough decisions but now is the best time to start moving forward.
Dear Ken Keller,
For the first time in a long time I want to make our company holiday event something special for my employees. We’re having a good year and I want to thank everyone. What ideas do you suggest? —- Michele Z.
It’s a great thing to want to reward your employees. You have some major decisions to make, such as what day of the week will you hold the event? Where will you hold the event? Who is invited to attend? Will food and beverages be served and what kind?
You have to be careful that when planning the event you do so with the goal of making sure your employees are comfortable attending, not just the location, but the day of the week, the time of day and any dress code requirements.
Let me suggest you gather a small group of employees and ask them for input. While you may get as many ideas as the people you ask, this will give you some idea as to what they want and what they will enjoy. Use that feedback to make it the best possible event for those you want to thank.