Many startup founders and small businesses dream of receiving an offer to becoming the next billion dollar business. Whether its because they are ready to move onto another project, or they are ready to expand and are looking to leverage the financial power of a bigger partner, selling a business is a big move for any business. For many business owners, getting an offer from a buyer is certainly exciting, but before you jump into anything, remember that are important steps to take before you sign the paperwork that will move a successful transaction forward.
From making sure you have a functioning and potentially lucrative business model, to working with an expert to establish goals and expectations on both ends to ensure everything goes smoothly.
Here are 4 essential steps that will help you avoid potential setbacks and increase the chances of a fair and satisfying transaction while you are selling your business.
1. Preparation is everything
Since you’re already a business owner, you most likely already know the importance of preparation. When it comes to selling your business it’s always wise to conjure up all that you have learned along the way and apply that to the process of making a sale.
Some of the key documents that buyers expect to see are:
- Corporate records
- Records of any important contracts
- Information concerning stocks and investments that would affect the relationship with the buyer.
Preparation also entails that you are forward about any setbacks or issues you had in the past that currently affect company operations. Being open about what failed in your business model will help buyers feel confident in their decision working with you, in addition to understanding what to potentially avoid in the future.
2. Setting up the right environment for buyers
Your business may have received endless praise from the press and has made the “most up and coming list” time and time again that doesn’t mean you are ready to sell. Good press will very likely attract buyers, but if you haven’t created the right environment to continue along with a merger and acquisition, those investors and businesses that were one so eager to scoop you up may not stick around that long. To ensure a productive environment for selling your business it pays to be open to new ideas, while also maintaining a professional setting from which trust can build.
3. Make sure your finances are in order
Financial records are vital when making a sale. Not only to they provide a clear outline of your businesses progress in numbers, they are also key to making sure you get what you want out of the final sale in the end; investments and any and all financial commitments. Ensuring that both parties are satisfied.
4. Hire a merger and acquisitions advisor
Even the most experienced business owners can benefit from the expertise of a mergers and acquisitions advisor. Trained specifically to help owners assess their the value of the business by reviewing it’s strengths and weaknesses on both a macro and micro economic level.
Some of the key ways that an M&A consultant can help you streamline the selling process are as follows:
- Professional who specialise in mergers and acquisitions are highly skilled at preparing for due diligence, helping you to navigate and organise the necessary documents and information that is needed by all prospective buyers
- If you are in the unique situation that you have more than one buyer interested in acquiring your business, an M&A consultant can help you assess which one will be the right relationship for you, especially if you will still be activity participating in daily business operations.
Again, experienced business owners may know everything there is to know about running a company, but that doesn’t mean they know how to appeal to buyers. Not only do you have to be in tune with your own company’s needs, but it’s essential that you understand what buyers and investors expect from a sale.
At the end of the day, even if you think you’ve found the perfect buyer, taking a few extra steps to ensure that a potential buyout will meet both parties needs and is overall good for the business can be done by being fully prepared and and working alongside an expert that will help to point you in the right direction. Successfully taking your business won’t happen overnight, in fact most transactions take about six to twelve months to complete, so it pays to be prepared every step of the way.
How To, In Practice, Distinguish Between Executive, Non-Executive And Independent Directors And Their Functions
Learn more about the differences in executive and non-executive directors.
Definition of a director in terms of the Companies Act
Section 1 of the Companies Act 71 of 2008 (Companies Act) defines a Director as “a member of the board of a company, as contemplated in section 66, or an alternate director of a company and includes any person occupying the position of director or alternate director, by whatever name designated”.
Powers of directors
Section 66 of the Companies Act determines that the business and affairs of the company must be managed by or under the direction of its board and that the board has the authority to exercise all of the power and perform any of the functions of the company, except to the extent that the Companies Act or the Company’s Memorandum of Incorporation provides otherwise.
The board of directors, for the first time in our current Companies Act has been assigned the legal duty and responsibility and play a very important role in managing the affairs of the company and making vital decisions on behalf of the company.
Number of directors required on a board
In the case of a private company, or a personal liability company, the board must consist of at least one director and the case of a public company, or non-profit company, the board must consist of at least three directors. A JSE listed company requires at least four directors. The company’s Memorandum of Incorporation may however specify a higher number, substituting the minimum number of directors required.
How to distinguish between executive, non-executive and independent directors and their functions
A clear distinction is noticeable between the different types of directors in practice, even though the Act does not distinguish between executive, non-executive and independent directors.
The below table gives a clear understanding of the differences between executive and non-executive directors:
Member of the board of directors with directors’ duties.
|Part of the executive team, as an employee of the company and generally under a service contract with the company.||Not an employee of the company.|
|Involved in the day-to-day management of the company.||Not involved in the day-to-day management of the company.|
|In addition to a salary, does not receive directors’ fees.||May receive Directors’ fees, but does not receive a salary.|
|Shareholders are not involved in approving their salary packages.||Shareholders must approve their fees by way of special resolution, in advance.|
|Employee entitlements apply, such as annual and sick leave.||No entitlements apply.|
|Has an intimate knowledge of the workings of the company.||They contribute to the development of management strategies and monitor the activities of the executive directors.|
|They carry an added responsibility. Entrusted with ensuring that the information laid before the board by management is an accurate reflection of their understanding of the affairs of the company.||Plays an important role in providing objective judgement, independent of management on issues the company are facing.
Independent, non-executive director
An independent, non-executive director does not have a relationship, directly or indirectly with the company other than his or her directorship. They should be free of any relationship that could materially interfere with the independence process of his or her judgement and they do not represent the shareholders of the company.
An independent, non-executive director should be evaluated on an annual basis to determine if they are still considered independent.
The role of these directors
All directors should apply objective judgment and an independent state of mind, regardless of the classification as an executive, non-executive or independent non-executive director.
Executive directors may be appointed as non-executive directors on other boards if this does not influence their current position and is in accordance with company policy.
Before a director accepts the appointment, they should be familiar with their duties and responsibilities and be provided with the necessary training and advice.
Managing Your Priorities And Learning To Say No
How you use your time determines the degree of meaning or fulfillment you have and the money you make.
Getting more done is not about managing your time; it is about how you focus your attention and intention during the time you have. When you focus on scheduling your day to do high priority actions, they are more likely to get done.
Since you can have more than one kind of high priority action, it is wise to define them accordingly by further prioritising your high priorities. High priority items or actions can fall under one or more of the following categories:
- Those needing to be strategically planned (working on the business)
- Those needing to be done in relation to yourself
- Those needing to be done in relation to your employees
- Those needing to be done in relation to your clients, customers, patients…
- Those needing to be done that are creative (new divisions, services, products, markets…)
- Those needing to be delegated outside your company (outsourced)
- Those needing to be delegated inside your company (insourced).
It is essential to master the art of saying no to anything less important.
When you are unclear about what your true highest priority or business mission is, distractions can take you ‘off track’ and consume your time, attention, energy, focus, power of concentration and productive capacity.
Related: How To Say No Nicely
Knowing what your highest priority business mission and primary objectives are prevents you from being as easily distracted by every so-called ‘opportunity’ that comes along. It allows you to be more discerning about the activities you choose to take on board and those you discard. Clarity of mission gives you the ability to ignore distractions, and that can be incredibly inspiring and empowering.
You cannot please everyone so don’t waste your time trying. Continually saying yes because you can’t bear the short-term pain of saying no will cost you greater opportunities and lead you to bite off more than you can chew. Your time is finite.
Block out all less important distractions. Give them up. Embrace your trade-off.
Try eliminating, or scaling back some of your activities to determine if reducing or eliminating them makes any real difference in your results. This also helps you determine which actions are truly the most productive priorities. Deliberately eliminate or at least reduce your trivial, unimportant, unnecessary and irrelevant actions. Your intentional limits can help you become more limitless.
Sticking to your own higher priorities each day raises your self-worth. Take command of your time before others do and tell them the truth, or they may possibly keep demanding from you. Your integrity and, at times tactful bluntness, will allow you to get your most important job done. Your true friends or colleagues will respect your time and your priorities.
Since your work will expand or contract to fill the time allotted (Parkinson’s law), if you don’t fill your space and time with high priorities they can become filled with low priorities. And, if you don’t consume your energy and material resources with high priorities uses they can become consumed by low priority ones. If you don’t intensify your day with inspired actions things can slow down. Your time x your intensity will determine your results.
Many distractions that are being initiated by others are often opportunistic in nature. Many are simply others trying to sell you something – an idea, a viewpoint, an opinion, a friendship – in exchange for your valuable life and time. Simply being aware of what is being sold allows you to be more deliberate in deciding whether you want to buy or spend time on it.
Gracefully, respectfully and reasonably saying no, may temporarily disappoint the opportunist, but eventually it will lead them to respecting and appreciating you even more. It shows that you are a professional more than just an amateur and that you value yourself and your time more than their distractions. It is wiser to have a long-term gain in respect than a short-term popularity.
So ask yourself every morning what exactly is the highest priority action step I can take today to help me fulfill my most purposeful, meaningful, productive and profitable dream tomorrow.
(Infographic) The 6 Best Ways Leaders Can Inspire Their Teams
Being an inspirational leader takes empathy, centredness and clarity.
One of the most effective traits of a leader is their ability to inspire and motivate a team. As a leader, you have to lead by example and the tone you set will resonate with the rest of your employees.
So what’s the best way to inspire your team? For starters, show your team that you care just as much about them individually as you do about the business. That means asking questions about their personal lives and getting to know them outside of the office. Lead with both your heart and head, thinking equally about your employees and the business, and balancing empathy with management. Not only that, but you should continuously find ways to support the professional development of your employees, listen and learn to what they have to say and value the input of each and every member.
Having trouble effectively inspiring and leading your team? Don’t worry, according to science, leadership is something that can be learned. In fact, only 24 percent of leadership skills are genetic, and the remaining 76 percent are learned. Overall, the top trait of inspirational leaders is centredness, meaning the ability to stay calm under stress, empathise, listen carefully and remain present. After centredness comes clarity, balance and self-awareness.
To learn more about inspirational leadership, check out InitiativeOne’s infographic below.
This article was originally posted here on Entrepreneur.com.
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