Even if You Never Want to Sell, You Need to Do This

Even if you never want to sell your company, you need to do something completely counterintuitive. You need to get your company “transaction ready.” Ready to sell. Ready to merge. Why, you ask, if it’s never going to happen?

A number of reasons. First, you may change your mind. Happens all the time. You wake up one day and decide you want out. Or you get a phenomenal offer that changes your mind.

Second, something happens and you are forced to sell. Divorce, serious illness, death of spouse or partner, financial loss in another part of your life, any number of things.

Third, and far more compelling than the first two, you owe it to your heirs, your partners, and your employees. For your heirs, do you really want to saddle them with a business that is not ready to be sold? That will take months and even years to prepare to be sold? Or that will have to be sold at a steep discount to its potential value because it is not ready for a sale?

For your partners and employees, is it really fair to ask them to invest their hearts and souls into your business when you are not prepared to do the same?

And this gets to the crux of the issue. What does it mean to be “transaction ready?” It means you have done all the things you can to maximize the value of your business. You have optimized on all fronts…product, innovation, sales, margins, people, systems and controls, processes and procedures, and on and on. In other words, you have done your absolute best as CEO. And isn’t that what your employees and partners, and all other constituents, deserve from you? In exchange for the dedication and quality you expect of them?

At Traversi & Company, we specialize in managing the sale of businesses in the $20 million to $200 million range. One of our high-demand services is getting companies ready to sell, even if their owners are intent on not selling. Or even when a possible sale is years away. The work - for instance, increasing sales, lowering customer concentration, improving profit margins, entering new markets, exiting others, top-grading personnel, improving systems and controls - is often quite complex and long-term in nature, but it creates immense value. Value that may never be realized by you, but will certainly inure to the benefit of your heirs, partners, and employees.

I explained this to a potential client recently, and she said, “Interesting! This is really all about leaving a legacy of value, and all that entails, isn’t it?” Well put!

Traversi & Company is a premier sell-side M&A advisory firm - a boutique investment bank - serving the lower middle market. Visit us here.