The Staffing Owner's Guide to Mergers & Acquisitions
Sometimes the next best move for your staffing business is to combine your competencies with an existing firm. Whether that means selling your business or acquiring another, it’s a great time to make deals. Here are some excerpts from our “Staffing Firm Owner’s Guide to Mergers & Acquisitions” to help you start the process.
Strong Performance and Future Outlook Successful, profitable companies are always in demand. If you feel like there is room for improvement from an operational standpoint, make changes now to increase your future value. Does your team need improvement? What areas are most profitable, and what’s not? These are some questions to ask yourself.
Clean Financials and Good Record Keeping Nobody wants to come in to a mess. You can help a deal along by maintaining clean and clear financial records – preferably audited, and easy for potential buyers to review.
Market and Market Position Buyers want to acquire competitive staffing companies within in demand markets. It’s important to know where you are positioned within your industry to make the case for why your market share is desirable. Do you see growth potential in your verticals? How are other staffing firms in my area doing?
Legal or Compliance Issues It is best to address any ongoing legal issues your company has head-on rather than waiting for them to be uncovered in discovery. Do what you can to limit damage and come to agreements before starting the selling process.
Setting the Stage for a Good Valuation
Don’t be indespensible – the business needs to be able to continue on without you.
The right people in leadership roles – the business needs to be able to continue on without you.
Identify and quantify your assets – Not everything that makes your company valuable is on your balance sheet. Reputation and trademarks are both things that affect your sale price. Be prepared to make the case on why these things are valuable.
Prepare a confidential business report - A sleek, easy-to-read confidential business report is something that can help you when it comes time to sell. These typically include: a confidentiality disclosure, an executive summary, a brief outline of company history, operational overview and analysis, an organizational chart, market analysis and marketing plans, historic and recast income statement and balance sheet, and projections of future earnings.
Keep good and accurate financial documents – this will help immensely when it comes time to sell and buyers are poring over them.
Improve your cash flow – In anticipation of a sale, you can improve your cash flow position to increase the value of your business. Maybe this means acquiring outside financing, or rearranging assets.