If you’re a CEO who plans to sell all or a portion of your business, you undoubtedly plan to get the best deal possible. To accomplish this, you and your
investment banker will want to get your house in order and optimize the value of your company so it is desirable to the best buyers.
Tie Up Loose Ends First
During the pre-sale analysis of your company, your investment banking team will review the strengths and weaknesses of your business. They will identify areas where improvements are necessary or loose ends need to be tied up. Common courses of action can include:
- Amp up efforts to collect on accounts-receivable and write-off those deemed uncollectible.
- Make sure accounts-payable is up-to-date.
- Tighten up inventory through markdowns or write-offs.
- Address and resolve personnel challenges that may be reducing efficiencies.
- Finalize any pending tax or legal issues.
- Ensure compliance and regulatory requirements are met.
Sellers who do their due diligence and get their ducks in a row before going to market look more credible to buyers. Credibility is key in getting buyers interested and securing top dollar for your middle-market business.
Finding Your Value Proposition
Your M&A advisor will devise a marketing strategy to shine a light on the value proposition of your business. To do so, they will look for qualities that your company brings to the table that will peak buyers’ interest.
To uncover the most (and least) appealing aspects of your company, and reveal your value proposition, they will ask you a series of questions. Some of these might include:
- Does your business own any proprietary technology that competitors don’t have access to?
- What intellectual property does your company own that is protected by trademarks or patents?
- Is your brand well known in the marketplace so that aligning with you would give a buyer’s brand a boost?
- Do you have employees whose industry connections or other talents bring significant value?
- Is your customer base or distribution network strong and appealing to buyers in a specific niche?
- What do you offer that your competitors don’t?
- Have you been approached to sell previously and what values of your business appealed to the prospective buyer/s?
- Which companies, if any, have you identified as good prospective buyers and why?
- Do you have an established, predictable revenue stream that would be attractive to a buyer?
- Do you have a business model that is scalable?
- What other attributes does your business offer that would complement or enhance the products or services of a prospective buyer and who might that be?
Getting the Deal Done
This Q&A process is invaluable to M&A firms. Once your value proposition is identified, the team will work to identify buyers who would be suitable to buy a business like yours and most likely to pay a premium.
With a solid understanding of your company and what it can bring to the table, the investment banking team has the intelligence it needs to develop a compelling marketing plan for your business and deliver it to vetted buyers. That in effect, is how you optimize the value of your business, and ultimately how you sell a business for the best price possible.
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Keywords: selling a business; mergers and acquisitions; sell a business; M&A advisor; M&A firms; middle market