It’s every business’ dream; to create something of significant value that a powerful equity group take an interest in and ultimately snap it up. Unfortunately, the creation part is just a small factor and even when a firm has got to that stage where it is attracting interest, there is still plenty of work to do before it is ready to be sold to the highest bidder.
Of course, the remainder of this article doesn’t proclaim to be an extensive “how to” guide – on how to take that medium business to the verge of the NASDAQ 100. Instead, it’s a brief rundown of just some of the processes that can be followed, to hopefully give the medium business owner a gentle shoe on how to take their company to the big time (or more specifically, to the big boys).
Sort out a corporate management structure
Going corporate is not something that can be done overnight. We’re not going to speculate on the type of structure that your business currently has, but there’s every chance that it hasn’t yet reached the corporate standard that so many equity groups demand. Admittedly, some will take on that task themselves, but in a bid to attract those lucrative sales it all looks better on paper if you’ve organised things already.
Of course, going corporate is no easy feat. Getting a middle management team together is hard enough and that’s long before you’ve finalised your executive managers. In essence, it probably requires years of planning although as some of the major private equity groups have demonstrated over the times, it could be a shrewd investment of your time. For more information, visit platinumequity.com and read some of the case studies attributed to some of their acquisitions and mergers.
Keep the finances in check
We’re not just talking about paying all the bills on time, which should be par for the course. Instead, keeping a sophisticated financial system is paramount to prepare for that next big step. Most of the time, businesses will spend two years planning their financial statements as they prepare for their sale. This can involve anything from keeping their standard and projected accounts in check, to separating the company’s real estate holdings in a bid to clarify exactly what could be involved in a sale.
Remove yourself from the business
Our third and final tip is probably the most important, and the one that only you can take charge of. With the other two issues, it’s possible to outsource others who can reorganise a business and in a lot of cases, a potential equity firm will do this for you.
When it comes to removing yourself from the business, there is little else they can do though. Some businesses will only “tick” if their owner is involved, and these are exactly the ones that are not attractive to that shiny equity firm. Gradually remove yourself, or at least make yourself dispensable, as this will be one of the primary issues that any new owner analyses.