Initial Planning Is Crucial to ANY Tranasaction


As Casey Stengel so eloquently put it many years ago:  

"If you don't know where you're going... 

                                          you might end up somewhere else." 

The issues mentioned in this article are just the tip of the iceberg, but they should give you an idea of just how important your up front planning can be to realize the results you deserve.

                                      Initial Planning is CRUCIAL                                                 to Successful Business Acquisitions or Sales 

Thousands of companies are bought and sold every year, and typically for very good reasons.  Yet, far too many of these transactions fail to live up to the expectations of either the buyer or the seller. 

Whether you are considering the acquisition or the sale of a business, no step in the process can have a more significant impact on your ultimate success than the initial planning you do to establish the parameters of the process. 

Unfortunately, many companies jump right into the process of screening candidates immediately after concluding the best way for them to grow is through acquisition.  While the decision may definitely be the right one, the result can fall short if they fail to spend the time defining EXACTLY what they are looking for before they begin "the hunt". 

Likewise, many owners jump into the sale of their business without first identifying exactly what it is that they were looking to accomplish through the transaction, beyond just the cash that will be generated. 

It is truly a tragedy when this happens with something as personally important as the sale or purchase of a business. 

So what's a person to do? 

Each situation is unique, and every buyer and seller has his or her own set of expectations.  In and of themselves, none are right, and none are wrong.  But the key element is to understand clearly what these are for YOU prior to rushing out to execute a transaction. 

What should I consider as a buyer? 

The foremost thing for you to clarify is precisely what it is that you intend to accomplish through your anticipated acquisition.  The following are but a few examples: 

  • Is your intention to strengthen your capabilities, or leverage your existing strengths?
  • Are you looking to increase capacities, or create demand for those already in place?
  • Is your objective to grow your market share, or tap into some markets that are currently alluding you?
  • Do you want to expand your presence in current markets, or explore new ones?
  • Are you looking to broaden your product offering to include complementary items?
  • Is one of your objectives to expand your geographic scope or capabilities? 

Once you clearly delineate your intentions, you will then need to consider a variety of characteristics to identify those that might particularly attract you to an acquisition candidate (Deal Makers), and those that would want to avoid (Deal Breakers).  The following offers some examples.  Take particular note of how these might be viewed positively by some buyers, and negatively by others, depending on their particular philosophies.  What is  important is how these would be viewed by YOU (not by others). 

  • Relationships with customers you are targeting (or those you might want to avoid);
  • Focus on a particular market channel that my interest (or concern) you;
  • Wages, salaries, and benefit packages which are particularly high (or low) compared to other businesses in the industry;
  • Condition of the physical facilities, either very posh (or down and dirty);
  • Management that is prepared to stay in place (or depart) after the sale;
  • A high (or low) level of reliance on subcontractors or third party providers; 

What should I consider as a Seller? 

Price is the most talked about detail of any transaction, yet far more deals fall apart as a result of mismatches between the parties, and failing to agree on terms and conditions.  Your requirements will more than likely fall into the following categories: 


Price is only one piece of the equation.  You will want a deal structured in a manner that maximizes your net AFTER TAX benefit of the sale.  Your personal situation will determine the best apportionment of proceeds to business assets, Vs non-compete and / or consulting agreements.   Some sellers need to maximize cash at the time of closing.  Others would prefer to have payments spread out over time.  Which you prefer will also influence the number of prospects who could buy your business. 


Are you interested in remaining with the business, or departing as fast as possible after closing?  Are you open to situations where the buyer may want your services for a transition period? 


Retirement is but one reason to sell.  You may be looking to enter a different profession, or move to another location.  Your own situation will certainly influence your flexibility on non-compete agreements. 


Often overlooked is the importance to many sellers of maintaining continuity of the business for the employees who have helped grow the business.  How this will be handled after the sale may be radically different, depending if the buyer is an independent businessperson, or a company which might plan to consolidate your operation into their own. 

Once again, each person has unique interests.  The important point is to clearly delineate those that of highest priority to you.  In this way, you can quickly evaluate each potential opportunity and determine whether it will satisfy your true objectives.  There is no reason to waste time pursuing prospects that can not satisfy your needs. 

POSITIVE Exits can be your objective sounding board as you work through these questions, whether planning to buy or sell a business.

To help get you started down the right path, we are pleased to extend a FREE offer to Business Owners in the Loveland / Fort Collins area, which you can download right from this site.

Our free Value Report will show you the gap between what your business could be worth vs where it is today.  And to help you set priorities for narrowing that gap, it will also show the five key areas where changes would add the greatest amount of value.