20 Apr Tech M&A: 20 Questions to Ask Before Selling Your Tech Company
Tech startups have replaced princes and princesses as fodder for the classic fairytale. In this modern dream-come-true, a tech company grows, builds a reputation, and ultimately makes its founders rich—all while making the world a better place. Fairytales are never quite as simple as they seem, though. Tech M&A is more complicated than fairytales might have you believe, and a sale can take years to pull together. Prince Charming rarely comes knocking on his own. Instead, tech companies need sage M&A advisory teams to develop a profile of the ideal buyer, then actively recruit that buyer.
Before selling a tech company, here are 20 questions you need to ask yourself:
- Who is our ideal buyer, and what will they be looking for?
- What is our product? What are we really selling?
- Do we have valuable intellectual property we need to protect?
- Who needs to stay on with the company after the sale?
- What are our key value drivers?
- What is our company culture, and what buyer is going to be a good fit for that culture?
- What do I want to see happen with my company after I leave?
- What deal structures am I willing to accept? Do I want to stay on after the deal?
- Is our company excessively owner dependent, and if so, what can we do to remedy that before we go to market?
- Do we have the right people in the right positions? Do we have a strong management team?
- Who has significant power in our company, and does their title reflect that?
- Who is integral to the ongoing success of the company? What role do they fill?
- What regulatory considerations will we have to manage when we sell this business?
- Do we have an M&A team in place who has experience in our specific industry?
- Are we prepared for the long and often grueling due diligence process? What about legal due diligence?
- What is our company’s current reputation and brand image? How might this sale positively or negatively impact that reputation?
- Do we have enough capital to continue running the company until it sells?
- What is my exit plan? Am I emotionally prepared to part with the company?
- Would a sale to private equity be a good fit for this company?
- Do I have realistic expectations about this sale? How do I know? Have I consulted at least two experts about this sale?
Consulting an M&A firm early in the process can greatly improve deal outcomes. M&A advisory firms help shorten deal timelines, increase value, and reduce stress. They also empower owners to continue running the business so that the company doesn’t lose value at a critical time. Be sure to interview at least two firms, and ask for specific details about their plan for successfully selling your company. The right team will understand your business model, the value of your company, and your hopes for its future, then work to help make those goals a reality.