Anyone watching the modular home building industry has
noticed that quite a few factories have changed hands over the past few years.
Excel Homes, part of H.I.G. has made a few large acquisitions including
All-American Homes, Mod-U-Kraf Homes and just recently added Keiser Homes in Maine . There are other
factories that have had sold over the past few.
Encouraged by the pace of activity in the modular home business-for-sale
marketplace, many owners are moving forward with plans to exit their companies
and are laying the groundwork for what they hope will be a smooth and
profitable business sale.
But selling a business is an unnerving task, even under
ideal circumstances. It's even more challenging when sale preparation is
lacking, deficient or misaligned with market realities. In the modular home
factory business effective pre-sale planning is the key to achieving your
desired sale outcome. Simply put, you can't afford to bungle the critical steps
that need to happen before you enter the business-for-sale marketplace.
Common Preparation Pitfalls for Business Sellers
The most successful sellers are meticulous about
getting pre-sale preparation right. Here are some of the most common mistakes
business sellers make during the preparation stage and some helpful tips on how
you can avoid them as you move closer to the sale of your company.
Going Solo
One of the biggest mistakes business sellers make is trying
to do everything themselves. Very few owners have the time or experience to
handle selling a company alone. Bringing in a sale professional that knows the
modular housing industry streamlines the process and ensures that your company
is truly ready for prospective buyers. Pulling together a talented team of
advisers should be one of the first things you do after you decide that it's
time to sell. Don’t give your factory to
a local Real Estate agent to sell. This is one of the worst possible mistakes
you can make.
Starting the
Process with Misguided Expectations
First-time business sellers often have unrealistic
expectations. For example, many sellers believe their companies are worth more
than actual market value and are then disappointed when their (over-priced)
business doesn't sell quickly...or at all.
During the preparation stage, it's important to right-size
your expectations. By evaluating the recent sales of similar businesses in your
area, you can gain more realistic insights about average sale prices and how
long it typically takes to sell a business like yours. Through consultations
with your business broker and other experts, you can also identify the types of
concessions sellers or buyers have made to close deals.
Getting the
Timing Wrong
Your personal feelings aside, it may or may not be the right
time to sell your business. While a strengthening economy is certainly helpful,
it doesn't necessarily mean that the business succession market is ripe for
every business in every industry. Even if the market looks good, it's possible
that your position could be stronger six months or a year down the road.
Determining the best possible time to sell your business is
tricky. But by using a professional that has their hand on the pulse of the
modular housing industry will be your best way to identify the when, who and
how much your factory is worth today and into the future. In some cases, it may
be better to wait until you have improved the company's financials or until the
market is more likely to deliver your desired sale outcomes.
Incorrectly
Valuing the Company
Valuation is a tricky process. Although there is a tendency
for sellers to inflate the value of their companies, it can be equally
dangerous to undervalue your business. If the asking price is too low, you may
leave money on the table or, worse yet, buyers may assume there is a problem
and move on to other opportunities.
While your own insight and quick, easy-to-use valuation
tools are a good starting point, ultimately, you need the objective valuation
provided by a qualified third-party. A Commercial Business professional who
understands the modular factory marketplace and has the expertise to provide an
accurate measure of your company's real value is likely your most valuable ally.
It pays to get the price right.
Not Spending
Enough Time on Preparation
Many business sellers are surprised by the amount of time
and effort it takes to properly prepare a business for the marketplace. From
determining value and setting the right asking price to compiling historical
financials and other documents, a multitude of tasks need to be performed
before you list your business.
At a minimum, you should begin the preparation process six
months to a year before you intend to sell the business and, ideally,
preparation starts several years in advance. In addition to allowing you to
complete all of the necessary preparations, longer lead time gives you time to
increase earnings or improve your company's competitive position, making your
business more appealing to qualified buyers.
Don’t wait to call in
a professional to sell your factory after your back is against the wall. If
you have been have some problems, either financially or strategically, consider
bringing in someone that may have options that might not actually have you
selling your factory. A good Commercial Professional sales consultant will have
many different ways to help.
There are no guarantees in selling a business and you can
never be completely assured that you will achieve all of your objectives in the
sale of your company. But business owners who approach exit planning systematically
and methodically are more likely to maximize their business sale prices and
sell on their own terms. To do it right, be sure to start preparing well in
advance of actually listing your business for sale.
No comments:
Post a Comment