Ready to Sell? Part 3

We recently attended an event, Maximizing the Value of Your Business and Getting Ready for a Sale, hosted by M&T Bank. We took away some valuable lessons, which we will be sharing with you in a three-part series. The first explained the importance of legal structure and involving experts to help you decide. The second post focused on how to structure your company so when you do decide you’re ready to sell, many of the big choices have already been made. Finally, the third post will share some tips when you’re ready to make a deal.

You are ready to sell your company. Congratulations! But how do you get from making this decision to closing the deal?

First, know your number. How much do you want to sell your company for? If someone calls you tomorrow and names a price, is that your number? You should know your number and support the number by knowing how other businesses in your industry are currently valued.

Also, what does life after the sale look like for you? Are you ready and interested in participating in the new company for a period of time? Are you ready for your perks to end when your company is bought (company car, sporting events tickets, the end of business travel)? Do you even know the full list of perks that will end when you sell?

The previous posts emphasized the need to plan early and set your company up for sale—no matter when that happens. Now that you are ready to move forward with a sale, here are some additional steps to take.

Clean up your books and prepare for due diligence. Do your financial statements support the value you see in your business? Do they tell the right story in historical reporting and future forecasting? Gather all the fully signed legal documents that any acquirer would want to see. These can revolve around contracts with clients, intellectual property, employment agreements, leases and organizational charts.

Engage your attorney. Have them prepare non-disclosure agreements so that you can share information immediately when you have an interested party. And have that attorney ready to help draft or review and help negotiate a letter of intent from an interested party.

Be prepared to share it all. Sophisticated buyers are going to have attorneys on their side making sure they are protected. Think early on about all the Representations and Warranties you’ll have to provide as a part of closing the deal, and start those discussions when the time is right.

Selling your business can be exciting, emotional, and stressful. But hopefully this three-part series provided you with some information you can use to help make the process run more smoothly. Again, we would like to thank the attorneys at Stein Sperling for sharing their expertise in the seminar.