Having led three sale processes as CEO, Marshall Dahneke, now an operating partner at Gridiron Capital, offers key considerations ahead of a process. One of them is making sure your house is in reasonable order.

“As strong as you can make it when preparing for a sale,” Dahneke says.

That includes having a strong finance team, both near- and longer-term strategic plans in place, and clarity in what you really want in a partner.

“And I'll just give you a hint here: it's not just about price,” he says.

Dahneke says it’s important to manage your business for profitability, rather than lifestyle, because a good portion of the investment value of the business is going to be driven by a growing bottom line.

“It's that EBITDA march upward and to the right,” he says. “Value in a business is not simply what you want it to be, so watch your fundamentals closely.”

Sellers should also address any unprofitable operations or product lines as soon as possible. If these are left in place, they're going to be anchors that'll drag down your value and add distractions during the process.

It’s also critical to establish and follow accounting policies and procedures.

“There's no greater buzzkill — and I've lived this dream — there's no greater buzzkill than accounting due diligence discovering that your EBDITA is far less than you thought it was,” he says.

Other best practices include establishing and maintaining up-to-date customer, vendor and employee files. He says not only is that good business practice, but it'll be tremendously helpful as you progress into detailed due diligence.

“Detailed due diligence will be very painful if you don't have the basics well organized,” he says.

Dahneke also points out that running a company sale process is essentially a full-time job and business owners should expect it to be quite a distraction from running the company. He suggests taking thoughtful and intentional steps in advance to help, such as identifying critical team members who can support you through the process.

“Have them take key roles in helping you run the business and keeping it running on all cylinders, even with the distractions of the sale process, as well as supporting you in the prepping and managing the sale process itself,” he says.

While there will inevitably be some overlap on these people, Dahneke says strive for leadership dedication on these parallel paths. Don't select four people and have all four people involved in running the business and in selling the business. Instead, split it up as much as you reasonably can so you don't have people up to their eyeballs on both sides of that fence.

During a process, he says message control for employees and stakeholders is vital.

“Secrets can be hard to keep, especially in smaller organizations. And frankly, as your long-held behaviors suddenly change — you always have your office door open and then all of a sudden it's always closed, simple things like that — people tend to invent and share their own stories to fill the gaps. And since excessive rumors can become an increasing distraction to organizational effectiveness, find ways to minimize those. Allow the organization and your team to just focus on their priorities and just keep distractions out of this.”

Dahneke spoke at the recent Cleveland Smart Business Dealmakers Conference, along with Gridiron Capital Managing Director Kallie Hapgood, Gridiron Capital Managing Partner and Co-Founder Tom Burger, and Kaulig Companies Limited President Tim Clepper, about key considerations when you’re pursuing a sale. Hit play on the video above to catch the full discussion.