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The Keys to a Successful Business Sale

By Generational Equity

Keys to Success

We often meet business owners at our executive exit planning conferences who pull our managing directors aside during breaks and lament the fact that they are attending our meeting AFTER unsuccessfully trying to find buyers for their businesses. They often say, “I really wish I had attended this conference BEFORE attempting to close a deal without knowing what the heck I was doing.”

More often than not, as we console them and attempt to see if we can help salvage a potentially thorny post-marketing situation, it becomes obvious that there are common reasons why privately held businesses do not find buyers.

In addition to making the mistake of not using professional representation (i.e., an M&A advisory firm like the Generational Equity), we have found that there are core reasons that need to be addressed before a second attempt is made.

According to the analysts with Axial (a network connecting business owners with capital providers), these common issues include:

  • Your business is disproportionately dependent on a customer, employee, or supplier (or in some cases, all three).
  • You don’t have a plan for growth. Buyers look for companies with a foreseeable path for growth.
  • Your company is strapped for cash flow. In general, the more cash you generate in excess of your working capital requirements, the more your company will be worth.
  • You don’t have recurring revenue. For companies with subscription-based revenue models, buyers have been known to pay lofty premiums for the advantage of being able to lock in predictable future revenue.
  • You are in a commoditized business. Often, the less differentiated your business is, the less attractive it will be to a buyer (however, this is not true if the buyer is from your industry and understands that this is the norm and may want access to your accounts).
  • The business can’t succeed without you.

Although all of these can affect not only a deal closing but also the valuation of the company and the structure of the transaction, the most critical factor is probably the last one. And the fantastic news is that out of all of these, it is probably the easiest to address and overcome.

All you need to do is proactively hire, mentor, and develop a middle-management team. And after doing so, delegate, delegate and delegate – until it hurts. Make yourself so unnecessary that you can take days off or even weeks away. Not only will this be good for your business and give buyers confidence in the longevity of the company post-sale, it might also improve your family life and give you time to develop a few hobbies, which are all positive results of taking an active stance on succession planning.

Certainly for the sake of space, and your time, I have kept this brief. In reality, delving into the “fixes” of a successful business sale are more complex than can ever be covered in a single blog post.

That is why we conduct exit planning conferences for business owners throughout North America on a regular basis. Although these require a few hours of your time (but are complimentary), our attendees tell us that they are the most productive business meetings they have ever attended. If you own a business and are contemplating an exit event in the next 3, 5 or even 10 years, you owe it to yourself, your family, and your company legacy to attend and learn how you can exit with the maximum profit possible. Here are some links to find out more:

If, after looking at these links, you are interested in learning more, please feel free to give me a call at 972-232-1125 or email me at and I will put you in touch with my teammates that can answer any questions that I can’t.

And please, if you do decide to find a buyer on your own without professional help, address these issues listed above in advance so that you can not only close a deal, but also find a buyer that is optimal for your company.

By Carl Doerksen, Director of Corporate Development at Generational Equity.

© 2017 Generational Equity, LLC. All Rights Reserved.

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Jay Dinnison, Owner of Sharpe Mixers
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).
Bil MacLeslie, CEO, ipHouse
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Andy Graham, Vice President, Modern Heating & Plumbing
We thank you Eric and Generational Equity making our dream come true.
Larry Moore, Owner, A Company Portable Restrooms
We will highly recommend Generational Equity and Musa Jagne to any business owner about to embark on the same process.
Karen S. Williams, CFO, BW Manufacturing
I couldn’t have asked for a better team than Michael and Deborah. We couldn’t have done it without them.
Robert Evans, President and CEO of Mealtracker Dietary Software
Bruce and I wanted to take this opportunity to thank Generational Equity for assigning Musa Jagne to our transaction. In Bruce’s words, “Musa did one hell of a job for us!”
Karen S. Williams, CFO, BW Manufacturing
I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.
Bil MacLeslie, CEO, ipHouse
We are extremely pleased with the way Generational Equity handled the sale of our company. Your associates, Tom and Chris, did an outstanding job of getting us (me) through the process.
Michael J Polarek, President, Paragon Packaging
We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.
Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
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Bil MacLeslie, CEO, ipHouse
I wanted to write you a quick letter to express our appreciation and our delight on the outcome of helping us through the process of our recent sale. We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.
Terry D. Wickman, President, Keytroller
We were happy to see the interest in our company and what we cherished has not just a valuable company but an important company to the communities we served in.
Larry Moore, Owner, A Company Portable Restrooms
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.
Ralph Noblin, President of Noblin & Associates
Greetings Mike. Thank you for the captivating and compelling presentation you made at the Phoenix presentation last week. Over many years in business yours was the most informative and well-presented presentation, on any subject, that I have ever attended! Your energy and enthusiasm combined with your concise and captivating support of your positions with easily understood examples and data was compelling.
Pete L.
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Robert Evans, President and CEO of Mealtracker Dietary Software
The help you provided us during each step of this process made us feel very comfortable and confident we were selecting the right approach to transition our Company.
Andy Graham, Vice President, Modern Heating & Plumbing
We knew it would be a difficult task to have someone really understand our business and our market, prior to researching a possible buyer, so it was imperative that we found someone of your caliber, with definite proven experience in this area.
Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
The process was much more involved than I expected and your help, experience and advice was a big factor in making the negotiations go as smoothly as possible.
Terry D. Wickman, President, Keytroller
I quickly recognized that Don was working for Sharpe Mixers above all else, and held our interests above others.
Jay Dinnison, Owner of Sharpe Mixers
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Michael J Polarek, President, Paragon Packaging
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Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.