If your business becomes the subject of unexpected acquisition interest, you might feel excited, proud, stressed, and unsure how (or if) to proceed with the conversation. Those emotions are normal, and we have a few quick tips to help you get started and feel empowered throughout the process!
Determine an Accurate Valuation
As a business owner, it’s critical that you determine an accurate valuation of your business. Good buyers will compensate sellers fairly, but to do so, they need to understand the current and future value of your business.
Consider the Timing
You’ll also want to consider the market, and whether the time is right to sell your business. If you’re in a cyclical industry, you’ll want to time the transaction so that you are on an upswing and have a high probability of very strong future sales. Acquisition interest often dissipates when industries are facing down turns.
Consider If the Buyer is a Good Fit
Another important consideration is whether the potential buyer is a good fit for your business. You’ve worked nonstop to build your business, from developing and executing your vision, to finding the right talent to hire, to the endless logistics necessary to sustain growth. Undoubtedly you want it to continue successfully going forward, and your employees deserve to be treated fairly. Does your potential buyer understand your industry – or at least, will they rely on the expertise of your employees? A good buyer will feel a sense of responsibility and pride in your business and will strive to continue your success.
Get the Right Team in Place
A team of seasoned professionals will help to ensure that your transaction runs smoothly – and can help you work through the items listed above. You’ll want to have an expert in each of these fields:
- Insurance – This often-overlooked component of a team is critical. You need to be armed with protection against common transaction risks such as potential loss of income, tax liabilities, and inaccurate representations.
- Valuation - We can help you determine an accurate valuation for your business and lay out the anticipated terms of a transaction based upon the current M&A market.
- Legal – You need an advocate on your side who will look out for not only your interests, but also ensure compliance with local, state, and federal laws.
- Finance – Many loans come with specific terms regarding future M&A activity. Without the right team, a business owner might be unaware of potential breaches.
- Investment Banking – Completing due diligence and negotiation of the purchase agreement can be overwhelming, and working with a trusted investment banker can ensure you receive your full value, mitigate attempts by buyers to renegotiate the deal, and maximize the probability the deal gets to closing.
There are many additional factors to consider and tasks to complete as you enter into an acquisition negotiation. At Symmetrical Investments, we can help you minimize risk and maximize profit. Utilizing our experience and extensive network, we guide our clients through these tough times and bring them out feeling stronger on the other side! Contact us to get started.