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How to Sell Your Business Quickly and Avoid Common Pitfalls
Discover how M&A advisors can help sell your business smoothly and securely. Axial’s Advisor Finder matches you with top experts for a successful sale.
As small businesses grow to become mid-market companies, they face a set of increasingly complex challenges that a home-grown management team, much less a sole owner, may not be able to handle on their own. Mid-market companies need a team of outside advisors to help them navigate through the growing pains to become more sophisticated firms tackling new heights.
If they haven’t done so already, companies at this stage should strongly consider implementing a board of directors comprised of experts within their industry and those of their customer base. A board can significantly help boost the firm’s operational success, competitiveness, and growth even further.
Here is a list of other critical advisors that mid-market companies should strongly consider bringing on board.
Banker: Financial Enabler
As companies grow, they increasingly need capital to finance operations, whether it be through working capital lines of credit, asset-based financing, commercial mortgages to expand facilities, and, if they do business in other countries, foreign currency loans, letters of credit, and other types of international trade financing. But that’s not all: at this stage of the business cycle, a mid-market banker can also provide treasury management tools to optimize liquidity and streamline administration, with such solutions as controlled disbursement, cash sweeps, more sophisticated payroll services, electronic payables and receivables, lockbox tools, and merchant card solutions. The right banker can also help mid-market firms start to consider health savings accounts, flexible spending accounts, 401(k) plans, and other financial benefits for their growing workforce.
Accountant: Minefield Navigator
Mid-market companies can face tax and accounting minefields as they continue to expand into new geographical markets, buy other companies, or consider going public. An accounting firm can assist mid-market firms with third-party audits, increased management of accounting personnel and tax compliance, development of enhanced policies, procedures and controls to help reduce fraud risks, and if going public, preparation of investor due diligence and post-investor reporting of financial statements.Â
Attorney: Strategic Servicer
Attorneys can provide mid-market firms with strategic counseling across a wide swath of areas as they continue to grow, including public and private capital formations, shareholder agreements, mergers and acquisitions, stock option plans and other stock-based compensation issues. Outside counsel can also help with structuring and formation of business entities, debt-financing transactions, equity investments, succession planning, contract review, joint ventures, multinational issues, as well as regulatory and compliance matters.
Consulting Firm: Expertise Across the Board
Consulting firms offer a multitude of professionals with expertise in specific areas of focus that mid-market firms need to tackle, including how to best leverage technology and analytical tools for increasingly complex data within their systems. Consultants can also help companies think about how to grow strategically — both organically with the right products and services that complement existing ones and inorganically with the right acquisitions. Consultants can also help mid-market firms develop more professional management teams and more formalized finance, human resources, information technology, and other functions befitting their new complexity.
Investment Banker: Market Insight Â
Many CEOS of mid-market firms may think they have no need to talk to an investment banker unless they’re planning to undergo a transaction immediately. But developing a trusted relationship with an investment banker can give a CEO access to meaningful information about the market to help them do their job more effectively and maximize their business’s value in the long-term. An investment banker can provide CEOs with an understanding of their companies’ valuation in the current landscape, help evaluate options for future financing, and provide a 5-year valuation target based on industry projections. As business owners prepare to grow their companies and think about future exit opportunities, having a sense of market expectations is crucial.
Employee Benefits Consultant: Outsourcing the Details
As small businesses develop into more mature mid-market firms, management needs to grapple with the need to provide talented workers with increasingly sophisticated benefits to help improve retention. Employee benefits consultants can help mid-market firms decide whether its more prudent to fully fund healthcare via one plan or via a menu on private exchanges, or whether to self-insure altogether. Benefit consultants can also advise on a myriad of voluntary products including supplement medical gap plans, disability and life insurance, as well as other benefits important to talented workers including 401(k) plans, wellness programs, and tuition reimbursement programs.
Board of Directors: Team of Experts
More than anything, as firms mature to mid-market status, most CEOs just cannot handle increasingly complex issues alone, even if they have a team of managers underneath them. To truly be successful in this next stage of the business cycle, mid-market firms should strongly consider creating a board of directors to gain perspective, gut-check decisions, mitigate emerging risks, and help chart a more strategic course for growth as the C-suite deals with a growing list of day-to-day concerns. Firms must choose board directors with proven expertise in both their industry and the industries of their customer base, to help avoid pitfalls and landmines as they tackle new issues, and best shape the company’s future growth as it continues to expand into new horizons.