My experience has lead me to believe that being “Sell Ready” is the only way for business owners to maximize value on exit, and all companies need to be “Sell Ready” even if their owners don’t intend to sell because life is Uncertain.
- There is common belief that we control our lives and destiny; however, if we are objective we can see that luck is an important determinant and life is Uncertain. This was brought home twice recently.A high school friend of mine, Marty Davis, owned a scrap metal business and we had recently reconnected after 35 years through Facebook. We planned to get together soon as he was now living in North Carolina. A week later I learned that a palette of copper had fallen off a forklift truck killing Marty instantly.
- A month ago a member of my Vistage group, Mike, an ex-marine and fit in his 40s, pulled over on I-75 not feeling well. He suffered a major heart attack and was dead by nightfall.
Life is Uncertain, but are we ready for it? In most cases not, even Prince wasn’t, dying with no will even though he was surrounded by a plethora of advisors. However, Uncertainty is more than death, it includes, Disability, Divorce, Partner Disputes, Running out of Energy, etc. There is no excuse for not being preparing for Uncertainty! Also, the disregard it shows to your family and employees is surely not the legacy one wishes to leave. If you are "Sell Ready" it doesn't matter in what form Uncertainty arrives, you will be positioned to survive.
So what is Sell Ready? I define Sell Ready as those companies that realize a price greater than their value. As Warren Buffett said, “Price is what you pay, Value is what you get” so for a seller I take that to mean, Price is what you get and Value is what you give up i.e. in 2008 at the height of the crises, Ford debt was selling for 35 cents on the dollar - price definitely less than value. On the other hand, HP’s acquisition of Autonomy for $11.1 billion, 79% premium over market price - price definitely exceeding value. If you are Sell Ready, you want to be like the Autonomy shareholders.
I will expand on "Sell Ready" and what that means in future posts, what it is, how to be "Sell Ready", and the benefits. Stay Tuned.