Cashing Out: Preparing for That Day
Reginald Weller has a rare perspective: he has been through the process of selling a company from two vantage points -- as a business owner and as an investment banker. After years as an entrepreneur, Weller recently became a partner in Green Tree Capital, an investment-banking firm in Healdsburg, Calif. He talked to Inc. about life before and after cashing out, and how to prepare for the big sale:
"I've never liked working for a big company. So I started several of my own, including National Safe Depository, a records-storage business that I sold after 10 years to a multinational corporation for $4 million. I stayed on for a while after the sale, but working for that company was the pits. I'm too much of a risk taker and self-starter.
"Many investment bankers think of themselves as entrepreneurs too -- especially people at smaller firms, like Green Tree, that tend to focus on growing companies rather than on large public ones.
"When I sold my company I handled it myself, without the help of an investment banker, because I had already developed the financial expertise to ready it for sale. But a lot of business owners are not prepared to do that without help. I've talked to business owners who don't even know the sales, or the profitability, of their different business units.
"They don't have adequate, comprehensive financial reports, often because they don't understand how valuable these reports can be to business managers. Preparing a company for sale can take six to nine months or even longer and requires an enormous amount of time and energy. You need to be able to anticipate the questions any buyer would have and provide the information any buyer would want. Anticipating the questions is my role.
"After all, many buyers have gone through the process many times. Most sellers do it only once."* * *