If a buyer offered to purchase your company tomorrow, what would you do? You’d need to figure out their motives first, and assess whether they are really serious. In many cases, the buyer is a competitor who respects your work. The process challenging, though, and takes months to complete. The risks can be extraordinary. So if you get approached and don’t have a firm advising you, you may leave money on the table—or worse, endanger your business. When approached by a buyer, most sellers make the same mistake: failing to properly investigate the buyer and plan for the transaction.
Investigating the Buyer and Assessing Sale Readiness
When a buyer shows up, it’s important to ask the following questions:
- Does the buyer really want to purchase the company? Or are they jut fishing for details that could give them a competitive edge?
- Is the buyer prepared to run the company? Is the seller prepared to sell? Are you ready for due diligence?
- How will you grow your company while navigating a sale? What will you do to avoid being distracted?
- How will you assess the offer you receive? What guidelines will you use to determine if the offer is reasonable?
- How will you negotiate with the buyer? What will you do to keep emotions out and avoid jeopardizing the transaction?
The Facts You Need to Know
Most businesses are simply unprepared for a sale. Consider the following:
85% of owners have no exit strategy.
65% of owners do not have a clear understanding of the strategic or financial value of their company.
Most owners have 75% of their total net worth tied up in the business.
Half of owners sell a company without exploring alternative options.
Don’t be among them. A little planning, knowledge, and support goes a long way.
Why Waiting for a Buyer to Approach is Not a Good Strategy
It’s unlikely that an unsolicited buyer is going to show up with the best offer, the best fit, the best terms, and the necessary skills to run your business. An unsolicited buyer is hoping to save money, and assumes you do not know the true value of your company. They’re looking for a rapid sale at a cheap rate, often so they can grow the business and resell it a few years later.
This is where M&A advisors come in. If you’ve been approached, you need to hire them. They can:
- Protect your confidential information.
- Preserve your relationship with the buyer.
- Determine the ideal value for your business.
- Help you understand how different terms can affect the total cash you walk away with.
- Invite additional buyers to create a competitive bidding process.
- Increase the deal value by running a professional process.
- Prepare you for due diligence.
- Negotiate on your behalf with the buyer, so you can focus your attention on running the business.
Your relationship with an M&A advisor is important, and not all M&A advisors are equally skilled. So spend some time asking for referrals and interviewing experts. Making the right choice could affect the total value of the transaction—and may even influence whether the transaction ever closes at all.
About Sunbelt Atlanta
At Sunbelt Atlanta our team is made up of seasoned professionals with more than 60 years collective experience selling companies. Our backgrounds and industry experience are as varied as the companies we represent. Some come from main-street, some from wall-street. Collectively, we have closed more than 500 transactions and the companies we have sold range in size from $50,000 to $25,000,000 in transaction value and span all industries. One thing our professionals have in common is that they all have first-hand experience initiating, negotiating and managing the deal process. We can bring a main-street tenacity to a middle market transaction and middle-market finesse to a main-street transaction.