Let’s face it; this isn’t like selling your car on AutoTrader. What’s involved with running and managing a successful sales process for an average $20MM transaction?
5,000 Hours on the Sell-side of the Acquisition
29,400 Emails
435 Task Requests
8 Firms to Manage
23 Sell-side Team Members and 34 Buy-side Team Members to Manage
Many business owners, even those who are excellent negotiators, make significant mistakes when it comes to the sale of a business. It is a complex, involved process that takes preparation, skill and know-how in order to come out on top with a successful sale under your belt.
Chances are, you have poured your blood, sweat, and tears into making the company what it is today. You want to be certain you are handling the sales process in the most effective way, so you will feel satisfied with the results of the sale. In other words, you do not want to make the common mistakes business owners make every day as they sell their companies.
If your objective is to do more than just sell—meaning you want to make the most money possible from the sale—there are certain areas you must consider in an effort to avoid costly mistakes.
You Need Help
Throughout the sales process, you will need advisors to provide you with sound advice and guidance. Most importantly, you need an investment banker. Representing yourself with an investment banker allows you to continue running your business during the often-lengthy process of selling.
Business must continue to go on as usual or else the end sale will suffer. An intermediary takes care of the complexities of managing the process and frees up your time to focus on maximizing the value of your business.
Be Prepared!
There are many areas in which you need to prepare yourself for the sale of a business—from being emotionally prepared to letting go of a company that has been a significant part of your life to actually preparing your business to reach its maximum attractiveness to buyers.
How do you prepare a business for sale? Many components go into the value of a business—from earnings streams to the way the business appears to the public. It is important to identify the potential value detractors of your company and take them into consideration as you prepare your business for sale.
The Right Time to Screen Buyers
It is wise to screen, research and qualify buyer prospects prior to revealing the name of the business and disclosing financial reports. Intermediaries can screen the prospects to determine if they are a good fit for your business, before the potential buyers know anything about the actual company. This means, your business is protected from unnecessary disclosure of information.
By screening buyers and keeping the sale as private as possible, you not only protect the sales process, but you also protect your still-running business from losing employees and customers who have heard through the grapevine you are selling.
Non-Disclosure Agreement
This is one thing you just can’t get around. To protect your business, you must have all buyer prospects sign a Non-Disclosure Agreement before any confidential information is relayed. If you just make it “standard protocol,” you do not have to worry about offending a prospect. Without a signed Non-Disclosure Agreement, you increase your risk for losing confidential information, from trade secrets to personal details that could negatively affect the sale of your business.
Asking Price: Hold Your Tongue
Stating the asking price for your business may not only turn off potential buyers, but also can cause you to lose value. If you submit a price that is too high, you may find yourself with few interested buyers. On the flip side, asking a price that is too low knocks out the chance of receiving buyers who would pay much more for the business. The best tactic? Don’t give an asking price.
Prospective Buyers: Don’t Put All Your Eggs in One Basket
A common mistake when selling a business is to focus on one buyer at a time or that there’s a perfect buyer. Working with several buyers allows you to have multiple options. In addition, it puts you in a much stronger negotiating position.
Objective: Keep Your Eye on the Ball
In the excitement of finding prospective buyers and the desire to sell a business, it is easy to lose sight of the objective. It is important for the seller to stay focused and remember that the objective is more than just selling, but rather to complete the sale effectively, professionally, and to receive the most money from the sale.
When the seller becomes too focused on just selling the business, it easy to overlook red flags and potential problems with a buyer prospect. Furthermore, make sure you are remaining in control of the process. Do not allow the buyer prospects to push you into a deal.
To learn how your company can benefit and best position itself within the M&A landscape, call or email me now to receive 3 hours of free consultative analysis. Our analysis offers clarity, based on your objectives, if a full or partial exit, recapitalization, divestiture, acquisition or pre-sale exit strategy provides the greatest benefit to you and your company.
Vercor has been delivering M&A expertise for over 25 years. We serve as a trusted partner to help build long term, iterative strategies that ensure you are positioned to meet your unique personal and financial goals whether it is selling, recapitalizing, acquiring or divesting of a division. Now is the time to evaluate, strengthen, prepare and increase the market value of your company regardless of your timeframe.
Todd Cummiskey
Vercor
704-926-6564
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