Frequently Asked Questions When Selling a Company
Now.
When time is on your side, you can explore every option. Things can go wrong and you have time to fix them. And choosing the best option(s) is a process that takes thoughtful planning.
Perhaps you need to hire, mentor or train other leaders to eventually take over for you. That takes time. Perhaps you need to fix things financially or get to a stronger competitive position to maximize value. Perhaps the marketplace needs to shift to provide you with the opportunity you know is possible. Buyers pay for results not potential and these things take time.
I'm not the first to say this but, being ready to sell at any time is an enormous competitive advantage.
This is often how deals are started. Somebody you know opens the door and says if you are ever interested....
Unless the timing is just wrong, it's ok to engage and it can be played to your advantage but, be careful. The results your customers and clients achieve by doing business with you is powerful evidence of your success and good to talk about. How you do it though, your secret sauce, not so much. Talking about revenues and margins and profits and price and specific clients are all things to be discussed down the road. Even the your best "frenemies" can and will use whatever you tell them to compete against you.
I frequently coach clients through these early conversations to keep things moving productively without divulging things you should keep to yourself.
Please don't. Not unless you've laid all the groundwork first. First, has the other side signed an NDA?
You have to tell the story behind the numbers in a way that buyers care about. It's a key reason clients hire me. I know from experience what buyers value, what they don't and what throws up a red flag. For example, are the statements audit ready? What does the adjusted cash flow show? What are the unusual items and what are normal? What information needs to be explained and what can speak for itlself? What is the story? My job is to answer each of these questions and dozens more.
As soon as you have the idea that you want to step back or retire. The best answer is, as many years before a transaction as possible. Advanced planning doesn't just mean sophisticated or expert advice, it means well in advance of a transaction. Corporate structure, company leadership and management, tax and investment strategies and estate planning all need time to put in place properly.
Beauty is in the eye of the beholder. No matter what you or I think the company is worth, the buyer is the one who matters in setting the value. However, you have the power of strong negotiation with us and the power of the word No. My job is to get you the best available deal. Your job is to decide if that meets your expectations. And, no matter what, the list below moves the needle on value.
- Revenues, margins, cost control, profitability. Financial trends
- Your value proposition - your key competitive advantages
- Opportunity costs
- The economy
- Your competition
- Strength of your clients and your relationships with them
- Key contracts and technologies
- IT systems, durable processes and operational efficiencies
- Key employees
- This is just the beginning....
And, we are here to help.
Breathe. And before you sign anything or hand over anything sensitive, assemble your team. Time is on your side and while many buyers pressure sellers from the start with arbitrary deadlines, the calendar is largely up to you to control.
Strategics are generally business operators themselves and have the capability to step in and run the company either with you or in place of you. Strategics can be competitors, suppliers, customers or companies in the same or similar businesses in other territories.
Financial buyers are generally investors, not operators. They employ others to run the businesses after they buy them. Financial buyers can include investment groups, private equity groups and business aggregators.
M&A advisor - I have spent two and a half decades building relationships with expert professionals like:
- M&A experienced attorneys
- Wealth advisors
- Tax advisors
- Insurance brokers
- Specialist attorneys
In a word, no. Although, you can of course if that is what both parties want. Generally, even though every deal is different, the more independently the company runs without the shareholders involvement day to day, the easier it is for any buyer to see value. And the more likely it is for that buyer to request a minimum or even no transition period.
Yes, you could. But, why don't you do your own taxes? Or, why don't you represent yourself in court? The real question is, do you know what to expect and how to prepare for and execute each step of the process to your advantage? Do you know the experts you need to bring you the best advice at the right time and place? And, are you comfortable negotiating each related piece of a deal puzzle properly share or minimize risk and maximize rewards?
The truth is, you will likely do this only once in your business lifetime and it's all we do. So, yes you could do it yourself but it rarely leads to an optimal deal and you still have a business to run while all this is going on.
Cookie Policy
This website uses cookies. By continuing to use this site, you accept our use of cookies.