M&A Sale Consideration Topics for Sellers
M&A sale consideration topics for sellers of middle market businesses can save you from chasing the impossible and help you maximize value when being acquired. When owners of privately held businesses start thinking about transitioning into the next phase of their lives by selling a company and cashing in on years of hard work there are some very common misconceptions about how to do this. These misconceptions are embedded in the two most important elements of the process:
- Who is the Buyer
- What is the Valuation
These are extremely high level concepts that are each made up of countless variables that are changing all the time. Because they are so important to successful M&A transactions, I would like to highlight some of the important components to get comfortable with before sharing your thoughts on possibly selling with anyone outside of your trusted circle.
- Learn what viable buyers are looking for now
- Avoiding common pitfalls when getting started
- How vital confidentiality is to the entire process
- Valuing your business based on its future potential
- Find out why “multipliers” and “rules of thumb” are usually wrong
- Pinpoint the characteristics of your best and worst buyers, and learn methods for finding buyers
- Identifying valuable business assets that aren’t on the balance sheet
- The importance of protecting your vital trade secrets during the selling process
- When should you sell? Now? Next year? In five years? What makes timing essential
- How normalizing historical financial statements can make a big difference
- Using market analysis as your base to build value
- Make the current economic trends serve you
- How to develop credible financial projections based on economics
- How to present your company’s history properly
- Explore the right and wrong ways to present your financials
- Strategies for maximizing your valuation
- Locating and managing multiple buyers
- What inside a business deters buyers
- Build sound business strategies to help protect you in a changing economy
- Enhance your buyer’s perception of a long-term strategy
- Properly qualifying your buyers can save much more than time
- What to look for when dealing with investment groups
- Keep control of the process right up until the check is in the bank
- Taking care of your employees – now and after a sale
- How to make informed decisions
The best odds you are ever going to have in taking business risks are 49% in your favor and 51% in failure. Don’t be under prepared. Rolling the dice and going out there to see where things shake out when you really do want to sell is going to end up badly.
Understanding what makes an attractive M&A target and what contributes to a premium valuation is the obvious first step. If you’re there, great. If not, it may be time for a pivot to set yourself up for success in the future. Success is the goal. Outcome over activity.
