When it comes to selling a business, most people think of it as an event. But in reality, the process involves much more than simply signing a few papers and collecting a check. Selling a business is more like an extended journey — one that requires both time, dedication and expertise. A successful sale often hinges on the skill and experience of those involved with supporting the mergers and acquisition (M&A) process.
How Can Business Owners Prepare for a Successful Sale?
Expanding through organic growth can be slow and ineffective. When a company seeks rapid revenue growth, business acquisitions can be a powerful tool to swiftly enhance revenue and supercharge the company’s overall value. When an existing company acquires another business—or multiple businesses, there are a range of reasons to support the acquisition. It’s important for the seller to understand the market dynamics of their industry and have their company ready to sell when the time is right. If you have not thoroughly prepared your business for sale, the offers you receive from potential buyers may be disappointing. One way to better prepare for the transition of your business is to have annual exit conversations.
In order to maximize their chances of success, sellers must take several steps before engaging with potential buyers:
Build A Team: Sellers should build a team of experienced advisors who can provide counsel throughout the process. This includes results-driven M&A Brokers with experience in market dynamics, negotiation, financial analysis, and the ability to run a competitive process.
Set Goals & Objectives: It’s important for sellers to set realistic goals and objectives for the sale process, such as timeframe and price expectations. This will help them focus their efforts in order to achieve their desired outcome.
Structure The Deal: Once your M&A Broker has identified interested parties and entered into negotiations, they can help structure the deal in a way that meets your goals while also providing potential buyers with a fair and attractive deal that will get closed. This could involve tweaking the terms of the sale for advantageous tax savings or offering incentives like a transition period.
Manage The Process: Throughout the process, it’s important for sellers to remain actively involved in order to ensure everything runs smoothly and according to plan. The M&A broker will keep them apprised of developments, provide updates to all parties and help sellers be prepared to make decisions quickly.
Define Closing Terms: It’s important for sellers to communicate all closing conditions to their M&A broker upfront so there are no surprises down the line. This involves setting expectations for deal structure, tax issues, regulatory approvals and financing requirements.
Annual exit conversations are about more than merely preparing a business for sale or succession. Having a dialogue allows a business owner to maintain their financial independence while transitioning to the next chapter of their life. It also allows the key personnel to decide what they want their next step to be and how it aligns with the overall company goals.
With the right team in place and an effective strategy, it’s possible to achieve your career and financial goals.
REAG can better prepare you to focus your attention, drive value while mitigating weaknesses, and maximize strategic resources. Our team works closely with clients to achieve their objectives and maximize the value of their businesses. To learn how we can help you achieve your goals, schedule a discovery call today!
