I recently came across an article on Business Insider that examined the 11 stages involved in finding and closing a deal with an optimal buyer. It reminded me of the chart we usually show attendees at our M&A conferences – although in our case, the process we use typically breaks down into 16 steps, not 11.
Either way, the reality is that selling your business on your own, without professional representation is a long, tedious, detailed process. This is how the folks at Business Insider describe it:
“Selling a company is a long and complex process. Preparing for a sales process takes at least 12 months, and then the actual process itself can take another 12 months. If you think of selling your business as something similar to a very long multi-year enterprise sales cycle, you'll begin to realize that a business sales process is like any other sale process in that it can be broken down into its core component stages and elements.”
We concur – although the time frame can be made much shorter if you use a professional M&A advisor as they will have experience in all facets of the progression and can usually speed the entire process up. Based on our experience, here are the 16 steps that you will need to take in order to find a buyer for your business:
Each of these steps is vital to the eventual successful sale of your company. And even though each of these is equally important to do correctly, perhaps the two most important ones that form the foundation of the entire process are the evaluation and value enhancement stages. In reality these two go hand in hand. The evaluation of your company will discover and highlight both your strengths and your weaknesses.
We all like to focus on our businesses’ strengths; however, value enhancement and improvement comes from identifying weaknesses and developing strategies to improve them (value enhancement).
A good number of our clients come to us already “buyer ready.” That is they have taken key steps along the way during the development and evolution of their companies to position them to be immediately attractive to buyers.
For others though, the evaluation is a useful tool because it allows the business owner to look at his/her company with a completely objective viewpoint and understand how a buyer might view the organization.
Naturally, not all business owners appreciate the idea that the business they have poured sweat equity into for years may not be attractive to buyers in its present condition. But the reality is that you can possibly improve your value and sometimes even your deal structure by applying some fundamental strategies.
As we have discussed in previous articles, buyers try to reduce the risk associated with an acquisition target. In advance of going to market, you can do this by implementing some ideas that you will learn about your company during the evaluation phase.
Changes and improvements you may need to make will vary from company to company. Some key areas of risk that buyers are keen to focus on include:
This is just a short sample list of typical value enhancements that can be implemented prior to taking your company to market that can make it appreciably more “buyer ready.”
The knowledge of what needs to be improved upon is, of course, based on the evaluation of your company. Since this is such a vital step in the process, chances are good you will need professional help in order to adequately analyze your business.
As Business Insider points out several times in its article, you can find a buyer without help, but if you want to close a deal with an optimal buyer at a premium value that has a beneficial deal structure for you, a M&A advisory firm is highly recommended.
If you would like to learn more about all of the 16 steps involved in the mergers and acquisitions process, I recommend that you attend one of our no-obligation, educational M&A seminars. We hold these throughout North America and they are designed to help you protect your interests if you do need to approach buyers without representation.
The most important concept you can take away from this article is that even though all 16 steps to a successful sale are important, the first two – because they set the foundation for the entire process – must be done correctly and completely.
If you plan on marketing your company without the aid of an M&A firm, at least hire a business consultant or accountant to help you prepare the evaluation documents that you will need.
Carl Doerksen is the Director of Corporate Development at Generational Equity.
© 2012 Generational Equity, LLC All Rights Reserved
Thanks again Phil and feel free to have a future client call me if they would like a referral. You are a true professional!Andy Graham, Vice President, Modern Heating & Plumbing
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.Ralph Noblin, President of Noblin & Associates
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).Bil MacLeslie, CEO, ipHouse
We are extremely pleased with the way Generational Equity handled the sale of our company. Your associates, Tom and Chris, did an outstanding job of getting us (me) through the process.Michael J Polarek, President, Paragon Packaging
We were happy to see the interest in our company and what we cherished has not just a valuable company but an important company to the communities we served in.Larry Moore, Owner, A Company Portable Restrooms
I wanted to write you a quick letter to express our appreciation and our delight on the outcome of helping us through the process of our recent sale. We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.Terry D. Wickman, President, Keytroller
We knew it would be a difficult task to have someone really understand our business and our market, prior to researching a possible buyer, so it was imperative that we found someone of your caliber, with definite proven experience in this area.Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
Thank you again for all your guidance and support. Any company will achieve what they intend, if they have you on their team!Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
I must say that I have never worked with a more driven, competent and focused individual as Don Ho.Jay Dinnison, Owner of Sharpe Mixers
I couldn’t have asked for a better team than Michael and Deborah. We couldn’t have done it without them.Robert Evans, President and CEO of Mealtracker Dietary Software
Tom Staszak is one of the most professional people I have dealt with in my last forty years of business. You’ve got a great group of people and you have built a truly professional organization.Michael J Polarek, President, Paragon Packaging
The help you provided us during each step of this process made us feel very comfortable and confident we were selecting the right approach to transition our Company.Andy Graham, Vice President, Modern Heating & Plumbing
We will highly recommend Generational Equity and Musa Jagne to any business owner about to embark on the same process.Karen S. Williams, CFO, BW Manufacturing
We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
Bruce and I wanted to take this opportunity to thank Generational Equity for assigning Musa Jagne to our transaction. In Bruce’s words, “Musa did one hell of a job for us!”Karen S. Williams, CFO, BW Manufacturing
Greetings Mike. Thank you for the captivating and compelling presentation you made at the Phoenix presentation last week. Over many years in business yours was the most informative and well-presented presentation, on any subject, that I have ever attended! Your energy and enthusiasm combined with your concise and captivating support of your positions with easily understood examples and data was compelling.Pete L.
Michael worked tirelessly, He followed every lead meticulously and urgently to make sure nothing was missed.Robert Evans, President and CEO of Mealtracker Dietary Software
We thank you Eric and Generational Equity making our dream come true.Larry Moore, Owner, A Company Portable Restrooms
Generational Equity’s assistance was invaluable in compiling and marketing our business.Bil MacLeslie, CEO, ipHouse
I quickly recognized that Don was working for Sharpe Mixers above all else, and held our interests above others.Jay Dinnison, Owner of Sharpe Mixers
The process was much more involved than I expected and your help, experience and advice was a big factor in making the negotiations go as smoothly as possible.Terry D. Wickman, President, Keytroller
I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.Bil MacLeslie, CEO, ipHouse
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