Thinking of Selling? Tips to Getting the Best Price
“There is no greater opportunity to make money other than selling your business,” declared John Gordon, founder of Pacific Management Consulting Group, and he explained seven things to nail down before you do so, at a Restaurant Finance & Development Conference panel last month. A few highlights:
Valuation is the cornerstone of any sale, said Jeb Ball, an investment banker at Brookwood Associates, and he warned against listening too much to chatter about what your business is worth. “The market is going to determine the value of the company, regardless of what any banker tells you otherwise. It’s a data-driven market first and foremost, and then there are other factors that influence,” said Ball. “You have to have a fully vetted conversation with bankers, more than one, about why your company is average, above average or below average.”
He adds this kicker: “It’s not about what you get, it’s about what you walk away with on an after-tax basis.”
John Berg, an attorney with Monroe Moxness Berg, said would-be sellers often inflate what their business is worth. “The seller always think they are operating at a higher level than others. But it’s about what the buyers will see when they are in the store,” he said.
Jerry Thissen with National Franchise Sales said getting qualified advisers who are experienced in your particular space is important. “There’s nothing worse than going through a transaction and not getting it done for whatever reason. If I take a buyer to a franchisor that doesn’t get approved, shame on me; I haven’t done my work. I should know through the interview process that they have the financials, that they have the operating background.”