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Understanding the reason behind your desire to sell is one of the most overlooked parts of the sale process. It may be that you want to bring in outside capital, think about who will take over when you step away, or an outright sale of your company. All these reasons should be looked at carefully before a capital event.
SECRET #1
There are no hard and fast rules about buyer types, but knowing these general characteristics – and how they potentially impact your WHY - will allow you to control your terms, legacy, and help to inform which things you might trade against price when selling.
SECRET #2
Buyers will pay a multiple of your company’s Revenues or EBITDA (earnings before interest, taxes, depreciation, and amortization), increased by the likelihood growth will continue, or discounted because current results are declining or may be lower in the future.
SECRET #3
You might be contacted by a potential buyer before you’ve had a chance to prepare your company, or your financials, for sale. In the case of this type of unsolicited offer, if you find the pitch intriguing (especially if it addresses your WHY), you might be inclined to provide a lot of information to this “White Night” without a signed LOI or professional guidance.
SECRET #4
You’ve built a great business, first with your impulses and grit, and then later by finding the right product market fit, hiring the right team, creating the right structure, and then professionalizing your enterprise so that your legacy may carry on without your involvement in each sale or purchasing decision. That should be a true source of accomplishment and pride.
SECRET #5
As mentioned in Secret #3, your buyer will be using your financials as the basis of their offer, typically a multiple of high-level or bottom-line economics. The offer will be frustratingly free of your views.
SECRET #6
6 Secrets to Selling your business
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