Just six months ago, most owners of privately held businesses were feeling pretty good about the economy and their prospects. Most had enjoyed a record-breaking year in 2007, and 2008 was shaping up to be another good year despite high gas prices and worries about a potential recession.  One year ago valuation multiples were at unprecedented levels and there was plenty of money available to fuel merger and acquisition activity.

Today, many of these same business owners are reeling from the combined effects of the dramatic credit crunch and economic slowdown. Those who had "been thinking" about selling their companies to diversify their risk and create long-term financial security now feel trapped and unable to pursue their goals.

These entrepreneurs are not sure of their options and have decided to wait until the M&A market picks up and valuations peak again. The problem is that the M&A market typically moves in 3-8 year cycles.  As a result, by simply waiting until the next wave comes, many owners will miss opportunities available right now, not maximize the value of their companies, and worse, miss the peak of the market again.

The message is: it does not make sense to just wait for the market to improve.  Instead, business owners should take this opportunity to get ready for it.

First, understand the value of your business and how saleable it is given current market conditions.  The truth is that deals are getting done in this market and good companies are still commanding good values.

Second, if the market is soft for your business right now, use this time to get ready for the market's eventual recovery. Focus your efforts on things you can do that will enhance both the value and marketability of your business in the future. Of course, every business is different, but in my book, The $10 Trillion Opportunity: Designing Successful Exit Strategies for Middle Market Business Owners" we identified that there are 54 value drivers that can either enhance or detract from the value and marketability of a given company.

Six Value Drivers

Business Plan: create a written business plan focusing on the company's growth opportunities and identifying the resources required to capture them;

Develop Your Marketing Tools: spend some time and money to enhance your company's marketing tools and website so that they make a positive impression about the company and clearly demonstrate the value added your company delivers ;

Contingency Plan: create a written contingency plan for your business in the event of an unplanned event (death or disability) of yourself or a key owner/manager.

Corporate Structure: discuss with your CPA if an alternative corporate structure would result in more favorable tax and/or marketability consequences in the event you sold your company;

Financial Statements: upgrade to CPA-reviewed or audited financial statements, going back at least 2 years and for each year going forward;

Management Succession: begin to groom and train your key employee to facilitate a smooth transition and reduce dependence on you;

Clearly, some value drivers cost more time and money than others to address. I suggest that once a comprehensive assessment is made and a number of value drivers are identified, you should ranked in terms of both impact on the value of your business and how relevant they are to accomplishing your goals.  For example, focus first on those that are "high impact/high relevance" and avoid those that are "low impact/low relevance."

The key is to be proactive and to understand your options now so that you can use this market slow down to maximize the value of your company and be ready for the next M&A cycle.