If you are a business owner seeking liquidity, either through a sale or by bringing new capital into the company, you are fortunate to be facing an incredibly strong market.

The number of mergers and acquisitions has been increasing for more than a decade. In 1998, the total value of those deals topped $1 trillion. And activity in 1999 and early 2000 has been on an even stronger pace.

For business owners, this means their company is probably worth more than ever. Some owners, however, are putting off seeking liquidity as they consider two questions regarding the strength of the current market: Can it get better and how long can it last?

A number of fundamental indicators including stock market performance, interest rates and continued growth prospects are sending mixed but cautionary signals in terms of prospects for further improvement.

As a result, if you are among the many business owners considering a partial or complete sale of a company or bringing in new capital, there are some well-proven rules you should consider:

-Don't rush to market unprepared. To do so could cost you millions. It is not all that unusual to hear about a company being sold, only to have the buyer sell the business a short time later at a much higher price. This can happen if you don't understand the "value drivers" and the true market value of your company.

-Start preparing the company for sale as early as possible. Financial records, legal documents, tax and regulatory filings, employee records, etc. must be current, complete and accurate. They will be subject to intense scrutiny in due diligence, and weaknesses here could be extremely costly.

-Don't expect the buyer to share your emotional attachment to your business. For the buyer, this is a decision driven by pure economics, and the less they pay you, the better the deal for them.

-Start preparing yourself for selling the company. Think about your goals and objectives, and how they are impacted by the sale of the company. Definitely consider how long you would want to work for the new owners, and under what conditions. (You will probably be expected to assist the new owners for a reasonable transition period.)

While most sellers want top dollar in cash at close, some structuring of the transaction is generally necessary to allocate risk and meet some of the needs of the buyer. Some degree of flexibility in structuring the deal can also result in significant tax savings, as well as a higher price to the seller.

-Know and understand the value drivers of your company. What is it about your company that creates or enhances value? It's probably best to get a professional valuation from a firm that is active in mergers and acquisitions. And be sure you understand how products, market position, company reputation, strength of management, competitive factors, market conditions and company size have been considered in the valuation.

Never miss a chance to increase the value of your company. Develop and implement a strategy to do just that. Be focused on increasing the value as much as possible by building value drivers.

-Avoid at almost any cost being the first to mention price. He who mentions price first, loses. By quoting a price first, the seller sets a cap on it, and the buyer likewise sets a floor on price by mentioning it first. Professional negotiators deal with this issue skillfully and with extreme caution and preparation.

-Try to negotiate the deal yourself. It is difficult, if not impossible, to deflect or defer decisions during negotiations if you are the decision-maker. While heading the effort, retain and work closely with skilled advisors in taking the company to market for sale or financing.

Also keep in mind that effective planning can save tons of money in taxes, and the best tax strategies often require up to 10 years to fully implement. Experienced legal counsel should review the likely areas of legal due diligence, and advise in properly preparing for this aspect of the process.

An experienced CPA should not only assist in preparation for due diligence but can also help evaluate the need for and benefits of audited (often very helpful) vs. reviewed financial statements for closely held companies not currently having annual audits.

A good investment banking firm is key to properly preparing the company for presentation, finding the best buyers, determining price (often the price each potential buyer can and will pay will be different), and assisting in negotiations, due diligence and deal closing.

-Don't be put into a position of dealing with only one potential buyer unless it is almost totally unavoidable. You will be amazed at the negotiating strength you gain from having additional interested buyers.

Enjoy the process. If you are properly prepared and advised, this can be one of the most exciting and rewarding experiences of your life.

Edward M. Bixler is president of BCC Capital Partners, a full-service investment banking and financial advisory company. He can be reached at ebixler@bcccapital.com.

Entrepreneur's Notebook is a regular column contributed by EC2, The Annenberg Incubator Project, a center for multimedia and electronic communications at the University of Southern California. Contact James Klein at (213) 743-1759 with feedback and topic suggestions.

For reprint and licensing requests for this article, CLICK HERE.