Selling your business can be an attractive scenario for any entrepreneur. When you’ve decided to market your business, my first question is: why? Your potential buyer will ask this also.
Some reasons might be divestment of a business area, a new strategy, changing geographical focus, or an owner’s retirement. It also may be that the owner wants to start another business or have a lifestyle change and focus 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
Understanding your motives is as critical as making sure that you have aligned the acquisition with your company’s business strategy. Sometimes we suggest fine-tuning the approach to make the company more attractive to the M&A market.
When we have agreed on targets and strategies, 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 creating the structure of the deal. There are many factors to consider, such as laws and regulations, IPRs, personnel, 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 both current performance and 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 present a company’s growth potential professionally has a significant impact on how the buyers view the opportunity.
Selling your business – prepare
Prepare for the sale as early as possible – preferably a year before the planned exit. It 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.
Views on acquisitions
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