16 Feb Are You Really Ready to Sell Your Tech Company? 5 Signs You Need to Wait
The worldwide COVID-19 pandemic sidelined many M&A transactions. But for the tech sector, the market remained mostly hot. And for tech businesses that enabled a shift to remote work and shopping or that supported the health sector, sales picked up. No one knows what the future holds, and multiples may eventually decrease. This means that now is a more certain time to sell your tech company than tomorrow or next year if your company is thriving. But what if it’s not? And what if you’re on the fence about the transaction? Here are five signs you’re not yet ready to sell your company.
There’s Infighting about the Business
If your company is family run or closely held, infighting about the future of the company is common. There’s nothing inherently wrong with this, unless that’s the sole reason you’re walking away. If there are serious internal disputes about culture, operations, or the business’s financial future, you need to get these under control before you consider walking away.
The Business is Failing
Buyers are inherently risk-averse. And the tech sector right now is thriving. So buyers have little incentive to buy a failing business, unless it’s at a steep discount. Unless you absolutely must exit now, you should do everything you can to maximize value and get the business back on track before you consider a sale.
You Don’t Have a Plan for the Future
Do you have good financial projections? A clear vision for how your company will remain profitable? Buyers want to be able to picture themselves at the helm of a thriving company. If your company is at a crossroads, that’s difficult without a plan. And if your operations are not optimized, a buyer is walking into a mess they have to fix. Buyers expect a steep discount when they have to fix things from day one. It’s better to get a plan in place and fix it yourself.
The Business Depends on the Owner
Owner-dependent businesses are a huge gamble because they often fail as soon as the owner makes their exit. Instead, it’s time to start preparing your people to run the business in your absence. That means getting a great management team in place, streamlining operations, and ending any micromanagement habits you might have. Your business is more valuable when you’re the least important part of it.
Your Company Struggled in the Pandemic
Tech companies that refused to pivot early during the pandemic, or that experienced extreme financial struggles, are not generally enticing acquisitions. This is because so many tech businesses thrived. If your company didn’t, it suggests that inflexibility, lack of ingenuity, or poorly run operations may be at play, and those are all hard sells for risk-averse buyers who can choose among a wide range of thriving businesses.
Austin Dale Group has experience with these and other situations. Contact us if you have questions or want to discuss your unique situation.