Blog written by Robert Champoux, RC Advisory Services
When you own a company, and you are taking home a comfortable salary, it is easy to procrastinate making some of the hard decisions that you know that you ought to do.
Hire a strong general manager if you don’t already have one. With his/her help, lean out the balance of the organization by “retiring” some of the folks that a prospective buyer will consider superfluous (it will be better for you to do it than the buyer).
Shed some of those long term customers that aren’t very profitable as well as some of those product lines that have lived out their usefulness.
Clean up the physical plant and stop accepting excuses as to why it is alright that the shop men’s room is dirty! (There is nothing that is more noticeable to a buyer than filth! (This requires a change in culture; you can’t just clean it up prior to every visit). Implement the “5S” procedure on manufacturing, assembly or distribution areas. These improvements will require you to “manage by wandering around”…….. and to look at your company as if you were a buyer. Look at the doors and doorknobs; are they dirty? If so, is anyone assigned to keep them clean? Are there old materials and tooling on the shop floor? This is an indication that it isn’t in use; get rid of it or put it out of sight in storage.
Are the employees engaged, positive and talkative to visitors? If they are proud of what they are doing and the work that they are performing, they can become the best reasons for the company to be sold for a premium.
Get your financial house in order. If your chart of accounts is a little “creative,” and you’ve procrastinated cleaning it up, now is the time to not only fix it but to also have your year-end financials reviewed by your CPA firm (instead of simply compiled). While more expensive, it will result in very “clean” set of financials that a prospective buyer will respect and not find reason to go “dumpster diving” looking for anomalies.
Similarly scan all older financial statements and personal and federal tax returns for the past five years as well as all corporate and insurance documents. As a part of due diligence, the buyer will want this type of information and the more prepared and open you are to providing this type of information, the less time will be spent looking for “issues.” Similarly, clean up and organize all paper file folders so that are neat and well organized.
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