Do you have a business that has been approached by a potential buyer?

The sale of a business is often the culmination of an entrepreneurial journey. The crowning moment in a sequence of events that started with an idea, and now ends with you standing back and gazing upon a business entity that’s independent, profitable, and the vital livelihood of many. Not to mention an important part of an industry that consistently provides great services or remarkable products.

It’s at this coveted stage that your curtain call sounds, and a sale often becomes necessary, for the good of the business – there may be new heights to be explored under different ownership. Or for the better of the owner, who may be seeking a change, a rest or another challenge.

But, selling a business can be an overwhelming task, and it’s important to go into the process with all the advice and information needed to make sure you get the best deal. Knowing how the buyer will evaluate your business, negotiating a fair price, and closing the deal are just some of the aspects of selling a business that you need to consider.

In this article we will provide advice on selling a business when you have been approached by a potential buyer so that you can be prepared to maximize your profits from this transaction.

Choose The Right Business Broker

When it comes to completing a successful sale, having the right business broker or M&A advisor is essential. An experienced advisor can help you navigate the complexities of the process and ensure that your organization gets the best possible outcome. Here are some factors to consider when choosing an M&A advisor:

  • Experience: Choose an M&A advisor who has experience working on transactions similar to yours. Ask for references and find out how long they have been in business as well as what their success rate is.
  • Reputation: Choose an M&A advisor with a positive reputation in the industry. Research them online and talk to other companies who have worked with them to get a sense of their performance and business integrity.
  • Communication: Choose an M&A advisor who is open to communication, listens attentively and is responsive to your questions. And, more importantly, you need an advisor that will perform diligence of the buyer on your behalf to ensure they are the right acquirer for you. .
  • Relationships: Choose an M&A advisor who has established relationships with local legal and tax professionals that will be integral to the sale.
  • Expertise: Choose an M&A advisor who offers a range of services, including due diligence, valuation, negotiations and closing assistance. They should also have an understanding of the tax and legal issues and other areas related to the transaction (though they will not provide tax or legal advice themselves).

Destined is your sell-side M&A advisor, at your service in all of the above.

Determine The True Value Of Your Business

Accurately determining the true value of your business is essential. This defines how potential buyers perceive and respond to your business, which then affects their decision-making process. To accurately determine the true value of your business, thorough examination of various assets and liabilities is required.

The numbers

Analyzing financial performance is an important step in determining the true worth of a company. Factors such as profitability, liquidity, debt levels and cash flow must be taken into consideration to get a better understanding of the overall financial position of the business.

The market

Market conditions should also be considered when appraising a company’s worth. The market will often dictate what businesses are worth, so analyzing current trends and future projections can help provide insight into how much your business may be worth.

The intangibles

Finally, the intangible assets must be considered. Factors such as brand reputation, market share and intellectual property must also be included in the valuation of your business. These items can often add significant value to a company and should not be overlooked in the process of determining its true worth.

Thus, determining the true value of your business involves analyzing both tangible and intangible aspects related to the company’s finances, market position and reputation. With proper analysis of all these factors, you may find that you have undervalued or overvalued your business prior to making an accurate assessment. Knowing your business’s true worth can help you make better decisions about how to move forward with potential  buyers.

Present Your Business Professionally

When selling your business, it is important to present your business professionally. This will help you create a positive impression and alerts potential buyers that you are taking the deal seriously.

The greatest mistake many business owners make when approached by a potential acquirer is to just begin handing over financial data requested by the buyer. This puts business owners on the defensive from the very beginning.

To maximize the value you receive an M&A advisor will present your business to potential buyers, using a Management Presentation that will include several key elements:

  • Present accurate and thorough financial information: This is the matter of disclosing profit or loss statements, balance sheets, cash flow statements and tax returns. This will give buyers an accurate picture of the company’s performance in recent years and your expectations for the future.
  • Explain the value proposition that comes with buying the company: When making a pitch for potential buyers, the presentation will explain why it makes sense for buyers to purchaseyour company. The advisor will show buyers what makes your business stand out from the competition and how it could add value to them.
  • Showcase your company’s strengths: Focus on your key strengths including any unique products or services that set you apart from your competitors. Highlighting the areas where you have seen success and be sure to explain why these successes are important.

Find Quality Buyers

When it comes to selling your business, it is essential for your M&A advisor to find and qualify each potential buyer. These are some attributes to look out for:

Sound financial resources and credentials

First, potential buyers should be able to easily demonstrate they have the financial resources and expertise necessary to successfully run your business.

An appreciation for what you do

Buyers who have an appreciation for your particular industry and understand its unique challenges and opportunities will provide you with a sale you can be proud of.

An illustrious track record and unfailing optimism

Buyers who have a good track record in similar businesses and a positive outlook on future growth prospects will help ensure continued success for your business, employees and customers.

Values and culture that match yours

Finally, be sure that any potential buyers share similar values to you when it comes to corporate culture and values.

When selling your business, finding a quality buyer can make all the difference in achieving the legacy you want to create as you move on to the next chapter in your life.

Structure A Good Deal

When selling your business, you want to ensure that you get the best deal possible. Structuring a good deal can be tricky but your M&A advisor will help you navigate some of the key factors that will help you reach a mutually beneficial agreement.

Understand the needs of all parties

Firstly, one of the key roles your M&A advisor will undertake is to understand what you and your buyer need from the sale in order for both to be satisfied. When this is established, it will provide a foundation for more detailed negotiations. The advisor will make sure that all major points of negotiation have been outlined so that both parties are aware of the key elements needed for the deal.

Consider all possible risks

You should also be made aware of any potential risks or liabilities associated with the sale, including ways these can be mitigated or managed before agreeing on terms. It is important for your advisor to take into account any short-term and long-term implications when negotiating.

Consider the timing

Another important area of responsibility for the M&A advisor is to manage the timing of the sale process to create a timeline to ensure that all negotiations are completed in a timely fashion. When setting deadlines, they will be realistic and allow flexibility so that any unforeseen delays can be dealt with.

Take a ‘fine-tooth comb’ to the agreement

Finally, you will want to review the agreements thoroughly with your M&A advisor and legal counsel before signing any documents. Ensure that all points have been discussed and agreed upon, as well as check for any possible legal issues or loopholes.

It’s an involved process – many moving parts need to align to ensure the best sale, betterment for the buyer, and a profitable sale for you. Let Destined be your guide. Our experience in sell-side M&A will help ensure a stellar sale for you. And we like to think we’ll make the journey an enjoyable one, as well.

We hope you found this insight useful.

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