Maximising the sale value of your business
Mergers and acquisition activity is once again on the rise. For business owners, selling your business will be unlike any other business activity you have undertaken. Achieving the best price for your business takes planning and nowhere is this more important than in respect of your people.
Beyond the legal issues such as contracts of employment and so on, purchasers look for three things when considering acquiring a business.
Firstly have you been able to build a culture and/or employer brand that is relevant for your business and that helps you attract and retain the talented people that make you a success? In the experience economy, where what differentiates your business is the experience that customers have when they engage with it (rather than the products you sell), what differentiates you as an employer of choice is the great experience people have when working for you. This goes beyond a mission statement on a poster in the office – it’s about creating a great working environment. Creating a strong employer brand takes time and a good place to start would be to ask yourself:
- What are the day to day frustrations about working in my business that just need to be solved?
- How do we recognise when someone or a team has done a stunning job?
- How do we keep talented people through the life changing events of family and business life?
- What’s the experience of joining my business like?
- How do we support career development in a world of flat business structures?
Next purchasers will be interested in your key team members – the superstars who are part of the succession planning in the business and who, if your plan is to exit the business, could take up the reins. Mapping out and developing the talent in your business is a good place to start. It can inform recruitment, prioritising your training and development spend, and identifying gaps in experience that need to be filled. Without a strong successor management team your business is less interesting to a purchasers and the value of your business will go down.
Finally purchasers will look at how you have locked key team members into the business. This might be through targeted equity and through well thought out and competitive pay and benefits. Giving equity to your key team members is not a simple exercise that can be done just before a sale. It takes planning, consideration of the options, and creating a scheme that has value for the team rather than being a token attempt to give them a stake in the future of the business. You need to start this process at least 12 months before you plan to start the sale process.
What is important and what creates value is a planned approach to getting these and your team sorted, the right skills and experience in place and having your people committed to the business post sale.