As the founder or heir of a successful, family-owned business, there will come a point where you need or desire to plan and execute an exit strategy, then take steps to sell all or a portion of your company. Ask yourself: Whom should I rely upon to help me through this process?
What if you could find an investment banker who specializes in the art of deal-making AND who also knows what it feels like to sit on the seller’s side of the table?
Wouldn’t you feel more comfortable turning to someone who has experience launching, running, and selling his or her own business and has walked in your shoes? You should, and here’s why. As a business owner, you are very good at what you do, which is running your business. At the same time, you probably have had minimal exposure to the business of investment bankers, which is the corporate finance world.
Rely on an Investment Banker Who Is a Business Owner at Heart
If you want to find and secure the best available transaction for your company and experience a selling process that runs as smoothly as possible, seek out an investment banker who understands both sides of the coin.
At Allegiance Capital, many of our investment bankers have spent years both as business owners and as advisors leading other business owners through successful sale processes. This unique combination works in favor of the business owners we serve, because we understand the emotions founders and heirs go through, how the selling process works, the hazards to avoid along the way, and how to get a transaction closed.
Ninety percent of the work we do at Allegiance Capital is focused on representing private sellers who are founders or later generation family member/owners or non-institutional business owners. We embrace that side of the business because we’ve been there, and we enjoy helping other business owners through what is likely the most important deal of their lives.
Insist on an Investment Banker Who Wants to Teach You the Ropes
While we have sold companies in a wide variety of industries, our real specialty is in knowing how to manage the process for private sellers and maximize their opportunity in a situation where the seller has little or no experience. How do we accomplish this?
In every situation, we find it is in the best interest of the seller (and their potential buyers) to educate the business owner up front.
If you’re planning to sell a company, find an investment banker who is proactive and, early on, goes out of his or her way to explain what you should expect during the process.
Some questions your investment banker should address include:
- How does the process work and how much time does it take (on average) to finalize the sale of a business in your niche?
- How does the investment banking firm find the best universe of potential buyers (both strategic and private equity) for your type of business?
- What information and documentation will you need to produce throughout the process?
- What is a definitive agreement and what does it cover?
- What roles will your investment banker, attorneys and accountants play throughout the process?
- What representations and warranties (promises regarding the property and assets you are selling) will the seller require?
- What funds, if any, will be put into escrow, for how long, and under what circumstances will those funds be paid or not be paid to you?
- What participation in the operations of the business, if any, will various types of buyers likely expect of you following the transaction?
- If considering private equity as a potential target to buy your company, what are the opportunities for continuing partial ownership so you can benefit from a second “bite at the apple” when they sell.
These are just a few of the many questions your investment banker should cover regarding the selling process. If anything is unclear to you at any point, don’t hesitate to ask for further explanation.
Take Time to Find the Right Banker and Be Prepared to Learn
If the time to sell your business is approaching, seek out an experienced investment banker who has walked in your shoes and is excited to teach you the ins and outs of the sale process. The better you understand the process of selling a company, the less likely you will be to face unpleasant surprises as the sale nears.
That’s why we place a high priority on educating sellers and why the time spent educating a seller up front reduces the chances of a good deal falling apart. If you want to speak with a banker who understands where you’re coming from and can answer your questions about the selling process, give us a call!