Landscape Management, October 2012

81 LANDSCAPEMANAGEMENT NET continued from page 79 QuiCk tip less money a buyer will have to inject into the business as working capital after a sale closes the more the business will be worth to him Another important step is identifying potential roadblocks to completing a transaction and working to resolve them Examples of potential roadblocks include unpaid taxes or unfled tax returns In many cases these issues wont derail the deal if theyre identifed and addressed However if a buyer fnds this kind of issue during due diligence his confdence will lessen Another potential roadblock is unresolved litigation If possible these matters should be resolved At a minimum they should be discussed openly with the potential buyer so their impact can be evaluated and a solution can be found One more potential roadblock is ownership which should be made clear to the buyer Are there former partners who legally still retain an interest in the business Another problem can arise from promises of equity ownership that might have been made to a key employee Such promises often are forgotten by business owners but rarely by the key employees to whom the promise was made If these issues emerge late in the sale negotiations theyre more diffcult to resolve without unexpected costs diffculties and delays its a sound idea to take an objective look at the business and consider what attributes it has that would make it attractive to you if you were a potential buyer Focus on what you can affect positively in the period before a sale is made Consider impressions Another important step involves facilities and equipment Do they present a favorable impression of the business and its operation For example a junk pile of old equipment somewhere behind the main warehouse facility presents a generally negative impression and it might raise questions in a buyers mind about potential environmental liabilities Cluttered and disorganized storage facilities present a negative impression even if the facilities arent part of a proposed transaction The condition of facilities and equipment will affect a buyers perceptions of the value of the business especially if he perceives a signifcant amount of deferred maintenance that will have to be addressed after the transaction is closed As you plan for the sale of your business assemble your team of advisors your lawyer accountant and merger and acquisition advisor Make sure theyre deal makers not deal breakers Your team will guide you through the process and help you avoid mistakes Taking steps to ready your business for sale often will improve the value of your business and its marketability Preparation can help increase the sale price of your business and make it more likely to sell within a reasonable time frame LM Edmonds a corporate finance professional with experience in merger and acquisition transactions is the principal consultant for The Principium Group Contact him at redmonds@ principiumgroup com The mosT imporTanT Thing To do when preparing a business for sale is keep iT growing and operaTing profiTably generaTing consisTenT posiTive cash flow