Common M&A Misconception: Preparation starts when you decide to sell

When should you start preparing to sell your company?

 

It’s a common question, but one that has major implications on the future of your business and success of an exit. If you’re at the point where an exit seems like the next logical step, you shouldn’t wait any longer to start with the preparation task. M&A is a process that begins well before any actual discussions occur. Waiting to prepare until things get serious is a sure way to delay going to market, possibly by months, which could result in missing your window of opportunity.

 

Envision you are participating in a triathlon next year. Would you start training a week before? Of course not, you would start months before. Preparation and planning is key to success. Whether you just incorporated your company or are still trying to grow, you can start preparation immediately with simple tasks like setting up a data room or finding your articles of incorporation and adding them to the data room.

 

Preparation isn’t limited to gathering documents and information. You, your co-founders, your investors and even your family all have to be aligned with the process and mentally prepared to go through it. Selling your business can be stressful and emotional — a negative mental state could hijack the success of the sale. Having a good exit plan and a good support system will help you get through the process smoothly. 

 

During your preparation, you should be looking at your company through the lens of a buyer, which is often a new perspective. If you plan well and run your business efficiently, when the time comes to have a dialogue with buyers you’ll be able to clearly describe your company, articulate the value proposition, the risks that your business may face and solutions to mitigate those risks.

 

As Dave mentioned in an earlier blog post, you, as the CEO, must constantly be aware of how you can improve your company and grow it. You need to plan for an exit from the inception of your company. Buyers are looking at multiple acquisitions every week - so be prepared to answer questions and provide required information quickly. If not, the buyer will move on. Timely preparation gets you through due diligence and to the deal you deserve.

 

Posted by , Vice President, Client Services on 14 July 2017
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