Should I fix my business or Sell it?

We often find that a client who has approached us to sell their business has concluded reluctantly, many times having agonized over the decision to sell for several months or years. Our selling process requires the client to undergo a rigorous analysis to determine the viability of the business, its strengths and weaknesses, and its current problems and long-term opportunities. In effect, we perform due diligence on the business before it goes to market.

A fascinating result of performing due diligence first is to learn that many of those clients don’t want to sell, but they have run into a problem they just can’t solve. Therefore, “Selling Out” appears to be their best and often times their only option.

When presented with a solution to the challenges they are struggling with, most will jump at the opportunity to “fix their business” rather than sell it.?

Most small business owners suffer from what we call “the Coke Bottle Syndrome”. Think of one of those early Coke bottles that were about 7 ounces, the glass ones where there were a lot of curves in the glass and the bottles were tinted green. Now picture your business as being housed inside a giant coke bottle. The curved glass and the green tint distort all the light that comes into your business. You are quite busy in your business and you don’t have time to look outside often. You seldom bother looking outside because nothing is really clear. Then when you run into a problem you have never encountered before, you find it difficult to discover a solution. You are too busy to take the time to get out of the bottle to go look for a solution. So you conclude that the problem cannot be solved, at least by you, and you decide to sell.

A Business Intermediary generally sits in the corner of the warehouse looking at your Coke bottle, sitting in a case of 23 other Coke bottles, on a shipping pallet of maybe 50 cases, in a pile of pallets amongst a hundred other products sitting on piles of pallets. The outsider sees things from a different paradigm.

Simply finding a new bank, remortgaging your property, or re-amortizing some term loans can solve many problems.

Other times, perhaps an investor or new financial partner can make a difference. There is a whole new source of financing opportunities known as recaps. A private placement or an Initial Public Offering could also provide a solution.

Often we find the owner is so overloaded that he or she is suffering from burnout. A relatively simple solution is available for those situations.

Sometimes an owner needs to empower the employees, which can in turn enable the owner to develop solutions internally.

Other times, the business has grown beyond an owner’s ability to manage, and hiring a manager to provide new skills and support will address the problems satisfactorily.

We are finding more and more, that a son or daughter would like to be operating the family business, but lacks the training and orientation that is so important to success.

Research and planning are often lacking and, when they are applied to the business by an outside consultant, many opportunities are discovered that the owner has been “too busy” to recognize or take advantage of.

Taking the time to identify and understand the problems and challenges will result in “Miraculous Discoveries” that can make a huge difference.

Often the solution is not to sell, but to buy out a competitor or a near competitor, to obtain additional product lines, customers, employees, capacity, location, or other advantages.

We have found that a solution as simple as giving a long-term employee more authority and responsibility will make a huge difference.

Sometimes the best solution is to create a strategic alliance with some other business to address a problem or a project.

The expansion program of Mercantile Mergers & Acquisitions was extraordinarily challenging until we implemented a program of “ local partnerships.”

Advisory boards are a wonderful way to bring many minds to tackle a seemingly insurmountable problem. Funny thing about those “Old Guys” on the advisory board; they have solved problems similar to yours, many years ago.

If you are in an unhappy, non-productive partnership, then buy the partner out.

At the end of the day, selling out should be your last choice, not your first. Once you have sold out, it is gone, and you can’t get it back if you should later realize that you should not have sold.

Take your time to fully learn all you can about your business, your customers, your suppliers and competitors, your employees’ strengths, your products or services, changes in your industry, new technology, and new ways to sell (ie: through the internet). Check with your kids (nothing worse than selling and then have your son or daughter ask, “Why did you do that? I wanted to run the family business!”), and the list goes on, and on, and on…

If you qualify we can discuss a free valuation of?your company.?

Mark Borkowski is president of Mercantile Mergers & Acquisitions Corp. Mercantile is a mid-market M&A intermediary firm located in Toronto: Contact (416) 531-4759 www.mercantilemergersacquisitions.com