The year 2023 may have been a slow year for mergers and acquisitions (M&A), but the downturn came on the heels of the biggest year on record in 2022 with 50,000 deals. According to Statista, the 2024 frenzy is just getting started, making it an opportune time for businesses to start planning ahead for potential acquisitions.
Exiting a business on your own terms takes preparation, starting with personal readiness. It’s important to assess if you are emotionally and mentally prepared to part with a business entity that you’ve likely built from the ground up. Make sure you are in a good place to move on to something else and tackle new challenges, as this is crucial before getting ready to sell.
Preparing the team well in advance is also key, as selling a company can be a dramatic event for everyone involved. It’s important to invest in preparing your staff for potential changes, as employees can be impacted significantly by an acquisition. This is not just important for the company’s survival but also for maintaining trust and being a responsible leader.
Financial bookkeeping is an often overlooked aspect of acquisition preparation but is crucial for showcasing a company’s value. Clean and accurate financial records can help justify a company’s valuation or asking price, and having several years of clean bookkeeping can significantly boost a business’s attractiveness to potential buyers. Platforms like Hub Analytics can help interpret and audit a company’s bookkeeping to ensure financial clarity.
Building and understanding an ideal buyer profile is essential in the M&A process. Identifying the right buyer ensures alignment of interests and potentially better deals for the seller. Different types of buyers may be interested in different aspects of a company, so it’s important to understand buyer types early in the selling process to attract the right partner.
Setting the stage early and maintaining long-term momentum are crucial steps in preparing for a successful exit. Starting early and maintaining strict compliance can help accelerate a healthy, high-profit acquisition. Additionally, continued innovation and market expansion can make a business more attractive to potential buyers and ensure its long-term viability, regardless of a potential sale. Overall, early planning and preparation can set the stage for a successful exit that can pay handsomely and pave the way for future business ventures.
