READYING THE SHIP FOR SALE: Five tips to consider when formulating a transition plan, and how private equity can help create value.

Author:Fleischer, Mark

Whether your goal is to prepare for succession in the future, sell your franchise business in the near term, or you're seeking flexible capital for growth, there are steps you can take now to best position yourself for success. For example, have you considered your current state of operations and cost improvement strategy? Or your brand recognition and market position? Are you focused on becoming best in class? Franchises that stand out in these areas are uniquely suited to maximize value, drive growth and make themselves attractive to prospective investors.

When a potential investor looks at your concept, it's because they believe they can enhance its value - they believe you have strong prospects for growth at your brand. As you formulate your plan, consider these five tips:

Tip 1: Prepare well in advance of a sale

One of the biggest mistakes we see is business owners hoping to sell in less than a year. Give yourself a three-to-five-year time frame to explore opportunities and move toward operational excellence. You won't maximize value if you rush to sell or your organization isn't poised for growth.

Tip 2: Look at cost efficiencies

Now is the time to strengthen your balance sheet and trim non-business expenses. To demonstrate your financial viability before a transaction, it's crucial to focus on cost savings and value-added improvements to your operations.

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Tip 3: CommunicatE your dream

Culture is important to franchises, and it's often what sets you apart. Share the story of your history and your aspirations for the future with potential investors. Sure, the numbers matter, but here's a solid opportunity to showcase what's unique about your business.

Tip 4: Remove potential impediments

Take out potential hurdles to your vision from your operating or capital structure. Why? Because the absence of complications or emotional issues gives buyers clarity and confidence about your organization. Buyers can expect a transaction to proceed more quickly - and with fewer surprises - if they're able to avoid minority partner issues or the involvement of non-operating partners.

Tip 5: Find a strategic advisor

Whether you need a CPA, an attorney or an expert in mergers and acquisitions, experienced professionals who've been privy to multiple transactions can bring you specialized insight. Whether this is your first transaction or your fifth, there's a lot at stake. Savvy advisors can help you avoid...

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