Get your business in shape for a sale: here’s what you need to know

If you want to get fit, you wouldn’t just start running a marathon

First, you would speak with experts who would help you define what ‘fit’ means to you, and advise you on the right approach, considering factors like your current health, lifestyle, and physical ability. When it comes to selling a language service provider (LSP) or language technology businesses, it’s a similar process.

Firstly, there’s the question of motivation. Why are you selling? There’s an emotional component to consider: many such businesses are family enterprises, so a sale represents a once-in-a-lifetime transaction.

Setting goals

Start the process by focusing on the end goal you have in mind: what’s the exit plan, and when should you start planning for it? Decide what you want and work back from there. For owners of LSPs and language technology businesses, there are multiple options on the table. You might want to sell because you plan to retire, move on, or hand over to another member of family or a business partner. You might be seeking a larger language services provider that may be interested in acquiring your expertise and client portfolio. Alternatively, you may want to sell a stake in the business to investors in order to grow further. You can also choose to sell part of the company either through a joint venture or by spinning off a separate division of the business.

Your personal, professional and company goals should align. If you’re the sole owner of the business, this might be straightforward – although you should still involve your family in the discussion because the process of selling the company will involve a lot of effort and time commitment. If there are other business partners or shareholders involved, you need to make sure everyone’s goals are pointing in the same direction.

Getting in shape to sell

Then, there are the practical elements to think about. Few companies are ready to sell immediately, so, like a fitness regime, it takes time and work. The process of getting a business ready for a sale is a journey that might end years from now – not days or weeks.

Being intentional about what you’re going to do will have a bearing on the steps that will follow. It will influence the people you choose to work with during the process, either as independent consultants or as an existing part of your team. These might be legal professionals, accountants, or possibly a board of directors you assemble as part of putting in place the structure to sell the business.

Spend some time refining the story of your business; the all-important narrative that attracts buyers to show interest in your company. Together with the financial numbers, the story needs to talk about the successes that got you to this stage, the challenges you overcame, and the future potential for the business.

You’ll also need to think about gaps in your business today that, when identified and filled, can increase your company’s value ahead of a sale. Once you know those missing pieces, surround yourself with the right advisors who can provide the additional skills and expertise you need to address them. Ensure those experts have shared values that align with your own, and plan from there.

What’s your worth?

Do you have a realistic, independently validated valuation of your business today? There’s a myth in the language industry that high multiples are common for LSPs – possibly as high as eight or ten times’ EBITDA. In reality, those valuations aren’t common. Standard valuations typically vary between three to six times’ EBITDA. (For language technology companies, valuations will be based on times revenue or discounted cashflow.) An independent expert with knowledge of the language and localization sector can help you to set realistic expectations for a sale. 

Do you know how you plan to look for a buyer? You could start going to conferences and networking, dropping subtle hints in conversation that you might be open to a deal. Alternatively, you can work with an independent broker that knows the language services market and can identify a shortlist of buyers that match your criteria.

If you want to know more about this area, visit Lion People Global’s website where you can fill out a questionnaire that entitles you to one hour’s free consultation on getting a LSP or language tech business ready for sale.