It’s a hard decision to make: Determining that you’re ready to retire or take a step back, and then having to determine what comes next: transferring company ownership and/or leadership to someone else, getting new people in place to take on new responsibilities, or making your firm look as attractive as possible to potential buyers.
We coach our members on this topic frequently, helping them prepare for what’s most important in effective succession planning. Whether it’s a company hoping to buy your firm, or someone who’s interested in taking over for you, there are certain factors they’ll be looking for …
Project Backlog and Work in Progress
The value of a company is established based in part upon project backlog. As part of preparing your business for sale or leadership transfer, it’s important to verify and evaluate your company’s most recent (and all large) contracts. Potential owners and leaders will want to make sure that the backlog hasn’t been built up with projects that may not go through. Take a close look at factors like estimation processes and job costing to get a true sense of what your project backlog looks like.
If they’re smart, potential buyers will want to connect with some of your clients, and determine how important they are to the overall success of your company. (Are you relying on just a few large accounts to keep business going?) You may be notified before they do this, or they may do it without letting you know. Either way, it’s important to verify and nurture your relationships with current clients now to make sure they’re satisfied in case they’re asked questions about your company and its work.
Another important factor worth considering: the types of services and solutions your company sells. Ensure that you have the talent, staff, and certifications required to deliver on the types of services and solutions you say you offer.
Also make sure that you know the nuances of your vendor-integrator relationships and agreements. Potential buyers or leaders will most likely want to talk to your key vendors to learn more about the relationship, successes and failures, potential areas of growth, etc.
What’s the longevity of your staff? Are there one or two salespeople who are pulling more than their fair share of the weight? How are overall employee engagement and satisfaction levels?
Make sure you know the details about the salaries and benefits you offer, as well as the general “temperature” of your staff. Compensation plans, non-compete agreements, employment contracts, and undocumented “deals” with key employees will all be taken into consideration.
The List Goes On …
Of course, there are several other factors that will (and should) be investigated as well:
- Legal issues, such as IP ownership, claims, outstanding litigation, and billing/financing/collections issues
- Contracts, including leases, work with subcontractors, phone/network agreements, etc.
- The current state of inventory
- Existing IT infrastructure and systems, including CRM systems, financial applications, and other business tools
If 2018 may be the year you prepare your business for sale – or decide to take a step back and let other leaders run the day-to-day business – NSCA can help you get ready.
Based on your unique situation, we can offer advice and feedback on the best ways to present your company goals, financials, and current state of affairs. Then, with a plan in place, you can start working on preparing your business for whatever the future holds. Contact us to learn more!