By: Wesley Legg
For most people the steps to selling their company are not that well known. Yet there is proven methodology that, when followed, increases the likelihood of a company obtaining a premium value and getting a deal done. The challenge typically isn’t finding potential buyers, it’s finding the right buyer or investor for you and your company. It takes a systematic approach to identify and connect with the best candidates, because it is not always obvious who the best buyer might be.
If you already have some potential buyer in mind, because they are a customer, partner, family member, or competitor, you should ask yourself if they are willing (and able) to pay fair market price for your business. Fair market value is the most likely price at which a business will change hands within a reasonable period of time between a willing buyer and a willing seller in an “arms length” transaction. That definition tells you what fair market value is, but it doesn’t shed much light on how price is actually determined.
As I previously mentioned, there is proven methodology that, when followed, increases the likelihood of obtaining a premium value for your business and actually getting a deal done. So what is that methodology?
At Founders, we believe the best way to achieve a premium valuation is to run a disciplined sell-side process. A sell-side process creates a competitive market by presenting the company and soliciting offers from multiple pre-qualified and informed buyers. It sounds simple enough, but there are five major phases to creating a competitive deal environment with an incredible number of steps and nuances along the way:
- Preparation & Packaging
- Buyer Research & Development
- Marketing & Buyer Communications
- Negotiations & Letter of Intent
- Due Diligence & Closing
Experienced M&A advisors manage this complex process to ensure a smooth and orderly transaction and assure that you get the highest valuation for your company.
For additional details about the phases of the process, download our eBook “How Middle Market Companies are Valued and Sold.” In the eBook we dive into each of these phases in detail from the vantage point of owners and CEOS who seek both a premium price and high probability of getting the deal done.
About Founders Advisors
Founders Advisors (Founders) is a merger, acquisition, & strategic advisory firm serving middle-market companies. Founders’ focus is on energy, SaaS/software, value-added distribution, industrial technology, internet, healthcare, and digital media companies located nationwide, as well as companies based in the Southeast across a variety of industries. Founders’ skilled professionals, proven expertise and process-based solutions help companies access growth capital, make acquisitions, and/or prepare for and execute liquidity events to achieve specific financial goals. In order to provide securities-related services discussed herein, certain principals of Founders are licensed with M & A Securities Group, Inc. or Founders M&A Advisory, LLC, both members of member FINRA & SiPC. M&A Securities Group and Founders are unaffiliated entities. Founders M&A Advisory is a wholly-owned subsidiary of Founders. For more information, please visit www.foundersib.com.