Oftentimes owners make business decisions based on what is easiest, cheapest or quickest rather than based on what would most benefit the business in the long run. If an owner were thinking ahead, or looking forward, they would more likely make decisions that would position the company to be purchased by a private equity group. PEGs are looking for companies that they can build upon as a foundation or that they can use as an acquisition to grow their business interests.
The reality of the situation is that if a private equity firm sees your company as something they will have to rebuild after it is purchased, they are going to associate that opportunity with the stress and uncertainty that comes with the rebuilding process. It’s not going to be an appealing sale for them, and therefore, believing that your company is valuable on the market simply because of its potential is not as realistic as some owners would like to believe. Likewise, many company owners underestimate the effect of company culture on the value of the business. Investors are not just looking for businesses with promising customer relationships, they’re looking for a well-established company culture that will continue after the owner departs. Building a well-structured establishment that is not only profitable but stable without the owner present and capable of growth and enduring change takes time. This is why it is crucial for any business owner to look ahead to the ‘end’ while they’re making business decisions even when it seems far off.
Read full article To Sell Your Business, Start With The End in Mind
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