owners face a myriad of challenges on a daily basis. One challenge that no
owner wants to grapple with is financial distress. If you’ve struggled with such
problems as declining profits, rising costs, fierce competition with no sign
that the situation will improve, selling may be the best solution. There are
steps that you can take to help maximize your business’ value and get a
relatively fair sale price.
Valuating Your Business
an easy decision to sell your company between the time and emotional
investments alone. However, once you determine that selling is your best
option, begin the process by making a hard-line assessment.
to find out what your business is worth, which you can do through one of our VR
business intermediaries. A valuation can give you a basis for negotiating the
sales price and terms with potential buyers. In addition, we will review your
financial statements and determine the liquidation values for assets such as
real estate and equipment.
assess the value of your sales volume and determine whether it might be
attractive to another company. Take note that your intangible assets such as
people, knowledge and intellectual property is just as important as tangible
property that can have significant value such as recognized brands, copyrights,
trademarks, proprietary customer or client mailing lists, and long-term
contracts. Just remember that the value placed on intangible property is likely
to be closely scrutinized by potential buyers.
understand your company’s market position, financial status, strengths and
weaknesses, you’ll have some idea of what you can expect from a sale.
Highlighting to the Buyer Your
going to have differences between finding the value in the sale of a distressed
company over one that’s stronger and more profitable. Buyers that are not just
looking to liquidate a business’ assets will want to see potential for
improvement and easy solutions to internal problems.
some qualities that buyers look for:
Sales volume potential
will see factors such as a loyal customer base and complimentary products and
services as very appealing. Buyers often seek opportunities to cross-sell with
their current product lineup.
example, if your company manufactures heating and cooling systems and a
potential buyer is in the business of selling, installing and servicing these
types of systems; acquiring your line of merchandise could help them strengthen
existing customer relationships and cut out competition.
buyers will find value in a transferable long-term lease in a good location for
it can alleviate the risk of rent inflation. They will also find interest in acquiring
unused facilities and equipment that can be repaired or upgraded and used to
increase productivity and generate new business.
look for opportunities to maximize under-used talent by restructuring job roles
and placing them in the right positions. They will also look to see if existing
management and company operators will be open to a change in ownership as that
can play in a hand in policy changes for example. In their efforts to increase
productivity, potential buyers might also eliminate marginal performers or
replace overcompensated employees.
growth potential won’t necessarily garner a higher sales price with a
distressed company, but it will make the difference regarding whether buyers
Positioning for the Sale
selling a distressed company can be a complex and delicate operation, we here
at VR can give you sound advice from the moment that you want to begin the
process. We have experience in selling financially-troubled companies that can
help you improve your competitive position and final sales price. We have a
large database of potential buyers that are interested in the kind of
opportunity that your company offers. Plus, we can help you devise a strategic
plan to identify such buyers.
VR to handle the difficult work of selling also can free up your time to
continue managing your company’s day-to-day operations — including maintaining
regular communication with lenders and investors. Communication with major
stakeholders is critical at this stage between pacifying their concerns
regarding the future of their investment and essentially, obtaining their
approval to selling the business.