Good books on how to sell a company are hard to find.
In many cases, they contain exactly the same tips on selling a business that every other "how to sell my business" book contains. Moreover, many books on selling a business are written in a style that is tedious to read, and, often, they are written by authors who have never owned and sold a business.
However, I just finished a great new book on how to sell a business that I would strongly recommend to every business owner, particularly to business owners of service companies.
Built To Sell: Turn Your Business into One You Can Sell (Flip Jet Media, 2010) by John Warrillow provides a clear roadmap on how to sell a business.
The author, John Warrillow, is an impressive Canadian businessman with a strong track record as a serial entrepreneur. He is the founder of four companies and is perhaps best known as the founder of Warrillow & Co, a consulting firm that helps Fortune 500 companies that sell to the small business market. In 2008, Warrillow sold his firm to The Corporate Executive Board.
The book is a pleasure to read. It's written as fiction, similar to the writing style of The Goal, in which protagonist Alex Rogo, a manager at a metalworking plant, struggles with his manufacturing processes and is advised by a guru who sets him straight.
Warrillow uses the same approach. In fact, his protagonist is another Alex, Alex Stapleton who heads up The Stapleton Agency, a creative services company that will do just about anything for anybody – from brochures to SEO to logos.
The opening story in the book is one that many entrepreneurs will relate to. Alex deals with headache clients, headache employees and headache financials. Fed up, he decides to sell.
He consults with Ted Gordon, a mentor/guru who explains to him that his company, as is, is unsellable. Through the rest of the book , Ted teaches Alex what it takes to create a business that somebody will want to buy.
Warrillow covers eight key steps that a business owner can take to transform a service business into a sellable company. Based on my experience, having sold a company for $10.5 million once, these steps make a ton of good sense.
The author explains some very important things along the way, such as how to avoid a buyout that has an earnout clause – a common buyout mechanism in service-company deals in which the proceeds from the business sale are paid out over time, based on the performance of the acquired company and usually tying up the acquired firm's business owner as an employee for many years. Warrillow's good advice explains how to get the money up front and get a good price for your business.
In addition to explaining the overall framework – the eight steps -- the book is jam-packed with good tips. For example, when you are selling a business and the acquirer asks you "So, why are you selling your business?" how would you answer that question. This book gives you a scripted answer that will help you close the deal. That's just one example of advice that you won't find in other business books on how to sell a company.
All in all, this was a great read and it's filled with great advice on selling a company. If you don't yet have an exit strategy for your company, this is a must read.