Imagine waking up one day and randomly deciding to sell your most valued asset – in this case, your home.
You pay no mind to potential renovations, upkeep or improvements and rely almost exclusively on its assessed value to arrive at your ballpark selling point.
If this scenario seems unheard of, it’s because it is.
These exact principles hold true when selling a business. Without the proper foresight, planning and prep work, you can lose untold amounts of money.
As a valuations principal with Manning Elliott, Hao Zheng works with companies of all sizes and types to ensure their valuations and future sales potential are seamless and effective.
“You should start this process early because that effort will pay off almost as much as all the other hard work you do with your business,” Zheng explains. “If you cannot measure it, you cannot improve it. You have to do this long before you sell so you can get a good deal.”
The perks of planning ahead
Ideally, Zheng engages with companies anywhere from three to five years before a potential sale, starting the process by becoming more familiar with a company’s management structure, talent pool and assets.
Zheng begins with the critical first step of analyzing your financial statements, particularly who prepares them. A reputable accounting firm’s endorsement can be a strong indicator of your company’s credibility and readiness for the market.
From there, it’s a case of boots on the ground, where he will visit the business to see the process play out firsthand.
Once those three early-stage criteria are met, Zheng lays the groundwork for a future sale: succession planning, meeting the buyer and connecting with lawyers, investors, bankers and accountants.
“We help them move the process along the way and boost the company’s value from the buyer’s perspective and then connect them with all the necessary networks,” Zheng says.
Setting the foundation to secure the sale
Through this process, the finer points of valuation come to bear, where Zheng and his team can offer several diverse suggestions to level the company up based on their unique circumstances and objectives: balance sheet optimization, purchasing more equipment, cost cutting, diversifying or divesting and more.
During these talks, Zheng also acts as an intermediary to handle the communication between all parties to alleviate the burden.
“Business owners are busy with the day-to-day priorities of the operation and may not think about the things that will increase the value outside of just working hard,” Zheng explains. “But this is the kind of work that will more than recover your costs.”
It’s at this juncture of a transaction that Zheng compares most readily to selling a home.
A homeowner’s proper due diligence would include examining the house’s repair, improvements and transaction history; ensuring safety precautions are in order and checking the title to ensure the property is transferable.
“Selling a company is way more complicated and difficult than selling a house, but they both require diligence in order to give you a good baseline in terms of value,” Zheng says.
Looking Ahead with Confidence
By planning ahead and partnering with Manning Elliott, you position your business for a prosperous future. Whether you’re years away from selling or just beginning to explore your options, starting early ensures that when the time comes, you’ll be ready to achieve the best possible outcome.
With expert guidance and a clear strategy, you can focus on what you do best — running your business — while knowing that your future is in capable hands.
To book an appointment with Zheng, email [email protected] or call (604) 714-3646. To learn more about Manning Elliott’s extensive suite of services, visit manningelliott.com.
