1. Thou shall not wait too long. Have you ever heard, "I sold my business to early?" Compare that with the number of times you've heard somebody say, "I should have sold my business two years ago." Unfortunately, waiting too long is probably the single biggest factor in reducing the proceeds from the sale of a privately held business. Exit your business from a position of strength, not from the necessity of weakness.

Business owners often contact us requesting an introductory meeting. They are contemplating the near to intermediate term exit from their business. The meetings generally have two major themes: 1. The beauty contest - they want to interview merger and acquisition firms or business brokers to evaluate their qualifications and process in comparison with other competitors and 2.

"I would rather expire at my desk than to sell my business and pay Uncle Sam one dime in taxes." How many owners that have paid their fair share of taxes for twenty years of building their business feel this way? The tax bite is the single biggest factor in an owner's reluctance to sell his/her company.

I have previously written articles discussing various aspects of transaction structures to minimize taxes.

Perhaps the most important business transaction you will ever pursue is the sale of your business. Many business owners attempt to do it themselves and when asked if they got a good deal, many respond with "I think so," or "I got my asking price," or "I really don't know," or "It was a disaster." Often times these very capable business people approach the sale of their business with less formality than in the sale of a home.

Two companies that are recognized as among the best at making successful acquisitions are General Electric and Cisco Systems. These companies have been star performers in growing shareholder value. The core principal that runs through almost every acquisition is integration. Over the past 10 years Cisco Systems has acquired 81 companies. Their stock price is up a remarkable 1300%.

If you are considering selling your business this article will help you evaluate your company as a strategic acquirer might. From that perspective it pays to focus on ten critical areas of value creation. The better your performance in these areas, the greater the selling price of your business. Below is our list of STRATEGIC VALUE DRIVERS:

1.

Not Recommended for Companies with Sales Greater than $1 Million

PURPOSE: To provide a quick guide to business owners that desire to sell their business but do not want a significant portion of the transaction value to go to a business broker or M&A intermediary.

1. Have an idea what your company is worth. The most common rule of thumb is that buyers usually pay a multiple of EBITDA.

Sellers have historically viewed earn outs with suspicion as a way for buyers to get control of their companies cheaply. Earn outs are a variable pricing mechanism designed to tie final sale price to future performance of the acquired entity and are tied to measurable economic milestones such as revenues, gross profit, net income and EBITDA. An intelligently structured earn out not only can facilitate the closing of a deal, but can be a win for both buyer and seller.

As Penn State professor William Rothwell ominously points out in the forward to Exit Right: A Guided Tour of Succession Planning for Families in Business Together, more than 40% of the people who run the closely held operations that comprise 80% of the North American economy will retire by 2007. Those businesses will either be sold to a third party or management team, closed down, or passed on to the next generation.

Wall Street reported a banner year for Mergers and Acquisitions activity with corporate coffers bursting with excess cash. It seemed like every large company deployed this capital in one of three ways; a stock buy back, an increase in dividends, or an acquisition. All three activities represent a vote of confidence in the future growth of the economy.