Business owners face a myriad of challenges on a daily basis. One challenge no owner wants to grapple with is financial distress. But if you've struggled with declining profits, rising costs, fierce competition and other overwhelming problems for some time, and the situation doesn't seem to be improving, selling may be the best solution. And there are steps VR M&A Advisors can assist you with to maximize your business's value and get a relatively fair sale price.
Deciding to sell your company is never easy. You've invested significant time and emotional energy in your business. But once you determine that selling is your best option, VR will help you begin the process by making a hard-line assessment.
First, we will find out what your business is worth. A professional business valuation gives you a basis for negotiating the sale price and terms with potential buyers. VR will review your financial statements and determine liquidation values for assets such as real estate and equipment.
We also can assess the value of your sales volume and determine whether it might be attractive to another company. Your intangible assets, such as people, knowledge and intellectual property, can be just as important as tangible property; recognized brands, copyrights, trademarks, proprietary customer or client mailing lists, and long-term contracts all can have significant value. Values placed on intangible property, however, are likely to be scrutinized closely by potential buyers.
Once you understand your company's market position, financial status, and strengths and weaknesses, you'll have some idea of what you can expect from a sale.
Give Buyers What They Want
What's valued in the sale of a distressed company is usually different from what's considered in the sale of a stronger, more profitable company. If they're not simply looking to liquidate assets, buyers generally want to see potential for improvement and signs that internal problems can be fixed relatively easily.
Typically, buyers look for the following three qualities:
1. Sales volume potential. A loyal customer base and complementary products and services are major draws. Buyers often seek opportunities to cross-sell with their current product lineup. If, for example, 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.
2. Facilities. A transferable long-term lease in a good location can be valuable to potential buyers because it can mitigate rent inflation risk. Buyers also are interested in acquiring unused facilities and equipment that can be repaired or upgraded and used to increase productivity and generate new business.
3. People. Buyers look for opportunities to maximize underused talent by restructuring job roles and placing them in the right positions. Existing management and company operators, however, must be amenable to a change in ownership. In their efforts to increase productivity, potential buyers might also eliminate marginal performers or replace overcompensated employees.
Finally, growth potential won't necessarily garner a higher sales price with a distressed company, but it will make the difference regarding whether buyers are interested.
Positioning for the Sale
Because selling a distressed company can be a complex and delicate operation, it's essential to get professional advice as early in the process as possible. VR M&A Advisors, who are experienced in selling financially-troubled companies, can help you improve your competitive position and your final sales price. We have a large pool of qualified buyers interested in the kind of opportunity your company offers and can help you devise a strategic plan to identify such buyers.
Allowing VR M&A Advisors 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, as they are likely to be very concerned about the future of their investment. Also, their approval will be essential to selling the business.
Where there's a Will, There's a Way
Selling your company is a difficult decision. But with adequate planning and preparation and the assistance from VR, even a company in dire financial straits may prove attractive to a buyer and sell for a fair market price.
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