Are you ready to sell your business?
Selling your business can set you up for your next stage in life or cost you your last penny. Preparing your business for sale is more than paperwork, taxes, and bookkeeping. Find out what your business is worth so you can plan your future.
From a hard truth to a strong exit.
A Montana manufacturer with $2.7 million in sales and 15 employees was ready to sell. The company paid twice the industry rate for what it bought. Sixty percent of its raw materials had expired on the shelf. The math it used to price jobs left out labor and overhead. For three years in a row, the company owed more than it owned.
The owner started with a strategic plan. Every resource went to its highest and best use, to bring the most return and get the company ready to sell. The owner counted every item, threw out 441 dead products, and emptied three-quarters of the warehouse. He rebuilt the pricing math to show true margins and put production on a forecast.
Every quarter, the team met to find waste and fix it. Employees took ownership of the changes and drove the improvement themselves. Those meetings surfaced the hardest finding of the whole engagement. The owner was the bottleneck.
The owner put every leader, themselves included, through our 20-week servant leadership program. The owner saw it then. Performance comes from culture, and culture comes from leadership. Employees began holding each other accountable.
Within a year, net profit crossed $1 million. For the first time in four years, the company owned more than it owed. Debt fell from 106 percent of the company’s assets to 54 percent. The team keeps getting better, and the numbers keep showing it.
The owner’s plan was always to sell the company and go sailing. The owner now sells from strength. The earnings are proven. The company owns more than it owes. Every remaining dollar of the gap is named and priced. When the buyer’s team comes to check, they will find the business the valuation describes.
A real Rich in Thought client. We changed the details to protect the company.
The buyer will check everything.
It is true. The buyer will check everything. Selling your business can feel like a colonoscopy. It can feel invasive after years of autonomy and privacy. The buyer still has to evaluate your business against their investment.
The buyer’s team will check your books, your customers, your people, and your systems. They will read your Google reviews. They will find surprises. Each surprise lowers the price they are willing to offer, because the buyer found it before you did, or took it into account when you did not.
We built VITAL Exit so a seller can get an estimate of the business’s transferable enterprise value and the reasons behind it, then address those reasons, maximize the value, and come away with a list of what to fix. You do not want to wait until you are ready to sell, because this takes time. It takes approximately three years to prepare a business for the day the buyer’s team arrives at your door to look at your books, interview your customers, and assess your operation.
Selling a business is different from running one.
Do you want to maximize the value of your business? There is a process for that. The playbook has been written. Most owners do not know it.
How much of your net worth is tied up in your business? The Exit Planning Institute reports that the business makes up 80 to 90 percent of the owner’s net worth. The same report states the unfortunate reality. Of the owners it surveyed, 65 percent say they will need the value of their business to pay for life after they leave it, and only 13 percent have a formal exit plan.
Source: State of Owner Readiness Generational 2025 National Report, Exit Planning Institute. Pages 36, 41 and 13.
Why is that? A person can sell a good product or service and build a growing business on it. That growth can hide the fact that the owner is the single point of failure and the key link to every success. Selling a business is different from running one.
A buyer pays more or less for that business based on how much it depends on the owner, whether its work follows written steps, and a number of other factors. VITAL Exit scores those factors with you, while you still have time to change the number.
What a buyer prices.
A buyer prices 23 things in a company, and we sorted them into six groups.
Who we are.
I’m Rich Turner. I’ve spent many years coaching Montana businesses as an owner, an operator, and a coach myself. One of the hardest truths I face in this work is that an owner’s business is often not worth what they think it is. Unfortunately, that reality usually surfaces after the buyer’s diligence team vets the business.
VITAL Exit exists so owners can obtain an accurate market valuation long before marketing their business. The best time to complete a valuation is three or more years before exiting, time enough to maximize the value you capture.