08 Jan 7 Strategies for Successfully Selling Your Company
Selling your business is a major undertaking, not something you can do overnight. Your company is likely your most valuable asset, and the sale could affect your retirement plans. While valuations are high now, the market is quickly turning downward, and high valuations are never inevitable, even during a market surge. Business owners must embrace thoughtful strategies for promoting value and making their companies attractive targets. Here are seven tactics that can help you successfully sell your company.
The Value of Your Company
You need a realistic understanding of your company’s value. Researching recent comparable EBIDTA multiples is helpful. Just make sure the businesses you look into are truly comparable.
Protect Your Business With a Well-Structured Sale
You must be fully prepared to put your business on the market. That means pre-qualifying all interested buyers, actively managing the sale process, and only pursuing qualified acquirers. You need to understand the components of all offers—assets, stock, convertible notes, cash, etc. An M&A advisor can help you negotiate the letter of intent to maximize value and ensure the best possible sale terms.
The faster you can get to the offer stage, the better. Sales that take a long time lose momentum and value. A well-drafted letter of intent can help you move the process as expeditiously as possible.
Prepare for Due Diligence
The buyer can’t just rely on your promises. They need to know that your company is ready to sell, and in good financial condition. This is critical to your negotiations. The buyer will undertake an exhaustive due diligence process to learn about your company and assess for problems. An M&A advisor can prepare you for this.
Determine Your Future Role in the Company
Negotiate your compensation and role early in the process before you invest too much time and resources. Too often, acquiring companies will delay negotiating this until it is impossible to negotiate a fair compensation plan. You can make lots of money after the sale if you play your cards right. An M&A advisor can help negotiate on your behalf.
Hit Forecast Benchmarks
You must continue to hit your financial benchmarks during the sale process. Not hitting these targets is one of the most common reasons sales flounder or fall apart. Your business isn’t sold until closing happens, and you never want to trigger concerns that cause the buyer to ask for a lower price or walk away.
Keep the Sale Moving Forward
Selling a business can be an exhausting and time-consuming process that demands significant resources. Establish a clear timeline for the unfolding of the sale, then stick to it. A team of advisors, including an experienced M&A advisor, is critical to moving the process forward.