So you’ve built your company, growing it with care. Now, you’re starting to think about how to make it even more attractive for a lucrative acquisition. The No. 1 thing to know: It takes time.
Don’t want to wait? Feel like you’re ready to retire tomorrow? Well, know that—if you rush it—you’ll soon be having a fire sale, and all the hard work you’ve put into your business won’t be reflected in that check you cash. History indicates that quick sales tend to put sellers in tight negotiating spots, so start early to prepare your company to attract the best buyer and close the best sale.
With a two to three-year planning timeline, you can ensure your business is ready to draw the best price possible. As with selling a house, sometimes you need to invest in the property to get prepare it for the open house. All those little improvements you could’ve been making over time will be money lost unless you address them early. If you’re serious about selling, it’s crucial to do your own due diligence on your brand, which requires a bit of critical introspection.
Here’s what you need to do to prepare:
Get your house in order
Before anyone even knows you’re considering selling your company, get to work! Make sure your finances are transparent and your systems up-to-date. Address and resolve anything a purchaser might view as a risk. All in-house policies and procedures should be documented so they can be easily handed over for smooth operations and a seamless transition. Invest in systems that enable you to highlight important KPIs and metrics. Hire top-tier lawyers and accountant to review your company so they can tell you where you need to do the heavy lifting before hitting the market.
Tackle any HR issues and have a strong, impressive staff and management team in place that will add immediate value to the sale. Be honest and forthcoming about any missteps the company has taken and consider how to frame that information for buyers, who are bound to unearth it while conducting their own analysis and due diligence. Imagine your company without you and make sure it can still run well if someone else had to step in to lead.
Line up your advisers
Having the right roster of consultants early is important. Your trusted accountant, attorney and communications strategist can all be looking at the business through various lenses as you construct a plan. Each person brings key skills to the table and, together, these weave the strategy that will carry you to the finish line.
Gather the data to tell your story
What was the vision for the company when you started? How has it evolved? Are your employees and customers loyal? Have you celebrated achievements, anniversaries and milestones? What are your plans for the next two years, and how can you make those known both internally and externally so everyone is aligned with the target goals? Are your communications channels working well with employees, clients and other stakeholders? This is a good time to conduct a brand audit and make changes where necessary. Build out storylines for your business, refresh your marketing and energize your team with a solid go-forward strategy. Make sure industry analysts and reporters know you and your business, and be systematic about making smart announcements that reinforce the health of your company.
Know your strength and selling points
There are many ways to value a company. You may be a lucrative prospect because your customer base is the envy of the industry. Your physical location and digital footprint may have buyers banging on your door. Recurring revenue and solid year-over-year increases might pique buyer interest. You need to maintain a brand that is respected, and it’s vital to possess the self-awareness to know which of your strengths and qualities will attract your target buyer.
Identify your best buyer
Selling your company doesn’t mean that you’re no longer invested in its success. As such, if the chemistry with a buyer isn’t right, you have to be willing to recognize that immediately. The last thing you want is to be courted by someone who won’t understand the company culture or vision, or connect with its employees and customer base. After all, a company is built on people and partnerships. Take the time to think about what your business needs to keep growing, and what type of acquiring companies and personalities would be the best fit. Who are they? What will they be looking for? How will acquiring your company help them? Think concretely about who won’t be a good fit. This is an important exercise to undertake with your external advisers so you’re all on the same page and don’t waste time and energy going after the wrong buyer.