Advanced Transaction Planning Considerations
When selling a company, maximizing value is a key, and often the principal objective. Many sellers fail to achieve the best outcome, however, because they do not prepare optimally for a transaction. This is common with entrepreneur-led companies where management is typically focused on running the day-to-day needs of the business, while continuing to drive revenue growth and profitability, instead of focusing on initiatives to secure the highest sale price. Frequently we see sellers unnecessarily fail to obtain the highest possible transaction value as a result of this myopia.
Selling a company is a complex and lengthy process that strains management resources. For privately held companies in particular, organizational demands often prove greater than necessary due to transaction unpreparedness. Since they do not have the reporting, audit, and filing requirements of publicly traded companies, many private businesses do not implement robust financial management tools, systems and controls, and other valuable managerial reporting capabilities. Additionally, since they are focused on building a successful and growing enterprise without public scrutiny of their financials (including managing to a budget and regularly delivering on projections), private company management teams often do not focus on these key drivers for maximizing equity value, especially in advance of the sale process…
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