It is summer and many founder-owners take a vacation this time of year. During which time they might go to the beach, read a good book, or think about retirement.
We generally have found, since starting Alderman & Company 24 years ago, that most founder-owners don’t think about selling their companies until they are ready to retire (assuming they don’t have heirs who want/can take over their business). Unfortunately, we have also found that too many founder-owners do not plan for their retirement far enough in advance to ensure that a sale process will go optimally.
It can take 3 to 5 years to optimally prepare a privately-owned company for sale. Examples, such as having 3 years minimum of audited financial statements, insuring potential environmental issues are resolved, filling-out the executive team, becoming cybersecurity compliant, etc., are all potential matters that can only be properly addressed when started far in advance.
While it may take only 6 months to sell a well-prepared company, it can take a year or more to sell a company that is not well prepared. More important than wasting time and incurring higher transactions costs, these delays almost always lead to substantial price erosion. As we often say in our Deal Notes®, planning is everything, when it comes to selling a middle market aerospace and defense company for an aspirational price.
For additional reading on the subject, see Deal Note® 109 (March 2024, titled ‘Exit Planning’) in our Deal Note® Library.
Have a great day,
Bruce Andrews
Partner
