Are you ready to sell tomorrow?

I wrote last time that I think we need to run our companies on a day to day basis as if we are ready to sell tomorrow, and shared that I think everything needs to be organised and ship shape which can then literally become the data room with little effort.

The second reason I think we need to run the company as if we are ready to sell tomorrow is linked more to the risk mitigation based decisions that we make on a daily basis.

Now I don’t mean risk per se as we need to be in the business of taking calculated business risks to grow a successful business.  But I mean making day to day business decisions that will minimise risk to shareholder value erosion.

What do I mean by that? There are many but a few examples would be -

Contracting – do any of your contracts have clauses that do not allow for change of control?

In sales, are all of your customers contracted? Ideally multi year contracts and ideally with revenue commitments?  Are gross margins consistent across all customers?  Have you addressed any customer concentration issues.

In supply chain, again do you have contracts in place with SLA's, would you benefit from dual supply?

Quality and Compliance – depending on your industry this may need to be at the heart of your culture with strong records and evidence that the systems are used and effective.

Insurance and relevant permits – is everything in place and in order?

In costs are you confident that all are relevant and there is no cross over between personal and business expenses?

Is your cap table and options awards as well as company statutory books, companies house filings and tax filings in order?

Management succession planning – have you identified and developed talent who are your successors embedding operational resilience?

This list is not exhaustive, but designed to highlight that most decisions we make as a business leader, will impact on the likelihood of success or failure and the ability to maximise shareholder value when a third party knocks on your day to acquire your business.

Running the business as if you are ready to sell tomorrow develops a mindset and habits that are very helpful to driving a successful sale.

As always would value thoughts on this subject in the comments below as well as from those who have exited following an unsolicited approach or are planning to exit in coming months.