If your company is performing well, you’re probably getting calls or emails from prospective buyers “acquiring companies in your industry.”
If you’ve been thinking about selling, this might be the opportunity you’ve been waiting for.
But it’s in your best interest to be a little careful, but it’s easy to leave money on the table or make mistakes that will kill the deal before it closes. Here are four things you should to before responding to any potential buyer.
- Assess your current situation – honestly. If you aren’t ready to sell or your company’s sales and profits are declining, don’t waste your time talking with buyers. It takes a lot of energy and only distracts you from the more important challenges of running the company.
- Educate the buyer – completely. It’s easy to share a few financial statements, but that isn’t nearly enough information for the buyer to make a serious, legitimate offer. If you don’t share the right information up-front, the buyer will almost certainly find something they could use to re-negotiate the deal later. That can be frustrating at best and can kill the deal at worst.
- Control the process – proactively. Private equity firms and many strategic buyers are experts at buying companies, and they will always prefer to dictate the schedule. A far better approach is to map out the steps to a sale and a schedule for completing them. Even expert buyers will honor a well-developed and well-communicated plan.
- Don’t leave money on the table. The first buyer to contact you is rarely the one willing to pay the most. And if one buyer has expressed interest in your company, then there are likely other buyers out there; you just need to engage them. You don’t necessarily have to “shop the company,” but you can often improve the deal by 20-30% by applying the right leverage.
So, if a prospective buyer has contacted you and you’d like to talk more about your options, then we’ll gladly give you some free advice over the phone.
No strings attached. Please reach out to us.
