Selling a company you put your heart, soul, and many years building, is not something that happens quickly. When the time does come around, the process may take longer and be more challenging than you expected. Even overwhelming and emotional. Below are five key points that help guide you towards optimizing both your Company’s valuation and your own happiness and well-being during the process.
1. This is Not Your Specialty, Hire Professionals.
Many entrepreneurs are shocked when they see how much bankers charge for mergers and acquisitions services, which leads them to making the mistake of trying to save on expenses. But keep in mind, selling is a specialized process. You only sell your company once, so you owe it to yourself to utilize the help of expert intermediaries who have done this several times before. So regardless of the size of your buyout, get over the sticker shock and hire the best and brightest!
2. Have Audited Financials.
A huge deal breaker during due diligence is when a buyer is surprised by the state of the target company's financials. Before you start a sale process, make sure your numbers are organized and orderly. Informing your CFO as early as possible in your selling process will help things run smoothly. This is a necessary and vital part of the process.
3. Honesty is the Best Policy.
Remember to be up front about everything from the beginning to the end. There is no such thing as a perfect business. If you are transparent from the start, there is less risk of a deal going south because the potential buyer discovers something negative during due diligence. Honesty is the best policy in all business transactions and selling any business is no different.
4. Negotiate the Deal, Not the Price.
Business owners often over focus on nothing but the purchase price of a deal. If your asking price is more than the value of the best public company in your industry, you may be a little unrealistic. Remember the goal is not just to find the best price, terms and structure but most importantly the best fit.
5. Don't Burn Out.
The selling process typically takes from six months to a year, so it's expected to get frustrated along the way. To stay motivated, remember to focus on the ultimate goal - closing the transaction. But, in order to keep this goal in mind, remember, why are you selling.