The Wisdom of Selling Too Soon

I made my money by selling too soon.
--Bernard Baruch

In our Exit Planning consulting work, we always get our clients—typically the owners of middle market companies—to identify a "target exit date."

We call it a target date, but it has flexibility…. The owner may decide to work longer because he or she wants to… Or may have to because financial conditions have changed. He may want to sell earlier because an unexpected opportunity arises.

The exit planning process is about having the business ready for that sale event, to the extent possible, even before the "target exit date."

We utilize a process we call Reverse Due Diligence. We coordinate a process using a sample due diligence questionnaire that a buyer might use in a Merger and Acquisition (M&A) transaction. We take on certain tasks and we assign tasks to the client and to the clients other advisors—particularly their CPA and attorney. By preparing Due Diligence binders in advance, we can 1.) find problems that will cause roadblocks in the sale process and correct them before a buyer is performing "real" due diligence" and 2.) look professional and organized when the sellers M&A team comes in to decide whether or not to represent the company and 3.) shorten the time it takes for the M&A firm to take the company to market.

By having this process completed in advance of the target selling date also allows the company to capitalize on unexpected opportunities, such as an unsolicited offer from a Private Equity firm. By having all of the necessary work done in advance, the company will look prepared and professional and likely get better results.

So instead of waiting until the top of the next market cycle, the best time to prepare for sale is now…

Comments

[Hassim423]

Hello,
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