Selling your business can be an attractive alternative to any entrepreneur. You’ve decided to sell your business. My first question is why? It is what the potential buyer will ask also.
Reasons can be divestment of a business area, new strategy, changing geographical focus or owner’s retirement. It can also be that the owner wants to start another business or change his or her lifestyle by focusing on other things. Some owners may want to sell when the company is in the red, but it is a lot harder to attract buyers.
Aligned with strategy
It is as critical to understanding your motives as it is to make sure that acquisition is aligned with your company’s business strategy. Sometimes we suggest fine-tuning the strategy to make the company more attractive to the M&A market.
When we have agreed on targets and strategy, it is time to start preparing for the deal. Reasonable valuation is of the utmost importance. It is a critical step in the selling process. There is no reason to continue if the owner’s expectations are much higher than what we at Wolfcorner see as being possible.
Structure of the deal
Another complicated part of the M&A deal preparation is to create the structure of the deal. There are many factors to consider, such as laws and regulations, IPRs, personnel, all current stakeholders, the market situation, timing, taxes, and finance in general.
Gathering all relevant data, analyzing it, and finally putting the information in the right format from the buyer’s perspective is worth doing well. Potential buyers are interested in the current performance and future outlook. They always want to look three years back, but two to three years forward is typically much more interesting. It can also be the basis for an earnout part.
Taking the time to professionally present a company’s growth potential has a great impact on how the buyers view the opportunity.
Prepare for the sale as early as possible, preferably a year before the planned exit. This will help you improve and optimize your financials, business model, and customer base to make your business more attractive.
If you want to get the best deal, let us assess and fine-tune your strategy.