When an entrepreneur decides it is time to sell his/her company, it’s hard to know where to begin. With so many legal and financial steps to follow, it can be an overwhelming task to manage and follow through. Many of our clients that have gone through transactions have shared with us some tips on how to prepare for this decision.
To protect the privacy of our clients their names will not be disclosed, their advice has been aggregated below:
1. Be clear with yourself on goals and motivations for sale.
The first step when considering whether to sell your company is to reflect on what you hope to gain from the sale and how you want it to be executed. Do your homework to ensure that you fully understand the impact of this acquisition beyond the dollar amount. Look at how it will affect your career, your company’s brand, and future. If you don’t already have a prospective buyer, spend time considering what the ideal acquirer’s profile would be and what corporate culture and values would be most desirable.
By setting goals and standards from the start, you will have a clear vision of how to reach the best outcomes.
2. Get your house in order.
The acquisition process is often long, complicated and even more so if the acquirer is a public company. Due diligence is a necessary process in all M&A transactions; it is long and arduous. However, there are ways to make the process easier for both you and the acquirer.
You can start your own due diligence ahead of the sale process, sorting through company history and financials, you are more likely to ensure the sale goes through smoothly. Getting your house in order includes simple tasks such as making sure taxes are filed correctly, getting your finance in order.
These tasks are things that you have to do to run your operation usually, and by doing just that you can make it easier for the acquirer to do their part.
3. Time to involve the experts.
Having the right experts — investment bankers, attorneys, and tax advisors — is a crucial part of preparing for acquisition and having a successful outcome. These experts will be instrumental in helping you position the company in the most optimal way for your exit, and they have the experience you will need for something that is likely a first-time event for you.
4. Be open with your management team.
Your management team is one of the critical factors in your company’s success, and an acquirer will certainly want to retain the best and the brightest in your talent pool.
By creating an open environment and keeping the management team informed and involved, you will better prepare your team for the transition once the acquisition is finalized. Open communication will put the minds of your management and potential acquirers at ease.
5. Secure alignment among key stakeholders to avoid last minute snafus.
It is essential to keep your board, and other key stakeholders rallied around the sale. By doing so, you create a level of transparency that will avoid last minute surprises or disagreements that can delay an acquisition or cause it to be derailed completely.
6. Secure major partnerships and clients.
Ultimately, when a company decides to acquire a business, they want to know that major customers won’t jump ship after the sale. To that end, it is crucial that (to a select degree) clients and key partners are kept informed about what is happening. Additionally, loyal and happy clients serve as valuable references to a potential acquirer, making their support a critical part of your strategy to maintain stability throughout the process and its aftermath.
7. Know your company narrative.
Task your team of experts, as well as your marketing and public relations teams, to work with you to ensure that you have a compelling, credible story to tell post-acquisition. You and your company will be in the spotlight, and it is critical to be prepared for it.
Your corporate narrative will be critical in inspiring confidence among employees, customers, and stakeholders and in convincing them to accompany you as you embark on your new journey. By doing this, you will smooth out the relationship between you and the acquirers even after acquisition.