Pay me now or pay me later

In a recent article, [1] John Zayac,[2] offered some pithy advice for owner/CEOs contemplating the eventual sale of their business.

• Build middle management. Buyers don’t want to purchase a business dependent on one or a few people.

• Commission an environmental assessment. If real estate will be involved in the deal, buyers will demand one whether you utilize toxic chemicals or not.

• Identify and document valuable intangible assets such as computer databases, contracts, copyrights, other intellectual property or proprietary technology.

• Convert financial statements to full accrual accounting, commission an audit and eliminate two more obstacles to a deal.

• Document in writing all policies, procedures, and processes so that the business could be run without you.

• Consider implementing employment agreements with non-disclosure and non-compete clauses for all key employees.

Zayac’s advice all falls in the category of pay me now or pay me later.

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[1] Advance Preparation, Mergers & Acquisitions: The Dealmaker’s Journal, November 2008, p. 79

[2] John Zayac is president of IBG Business Services