Ready to Sell ? Get the highest price for your company.
I am routinely asked by company owners as how they can get the most value for their company? My answer is always the same, leave it to professionals who truly understand how to value a company and know how to sell it.
Every day businesses are being sold in whole or parts for all cash, combination of cash and stocks or for a stock swap. Knowing how to select a brokerage or an investment banking firm depending on the size of your company may mean the difference between a good deal or leaving millions on the table. This blog will discuss the formal organized M&A used in my company when we represent sellers.
First, to get the most value out of your company, you must plan ahead. If you are thinking of selling your company or sell parts of it to raise funds, you must contact an investment banker or a broker at least 9-12 month in advance as the process that I am going to explain to you, takes time and lots of work for the sell side of the the deal team. If your business is doing over US$5M in annual sales, I recommend seeking a professional investment banking firm.
A professional firm knows that the first thing they have to do, is to truly understand your company and your business. If your company is private, expect your management team to spend a lot of time answering questions of an analyst so he/she can prepare the best defense in your valuation as the information is not readily available compared to a publicly listed company. This process can take up to 6 months depending on the complexity of your business and expect to pay anywhere from $10K-$150K for the valuation of your company and a negotiated percentage typically 2.5-10% success fee, on final transaction depending on size and complexity. This initial fee may come as a surprise to many business owners if they are not familiar with how the process works or if they are used to brokers telling them that they only have to pay a success fee. Understanding the process, will help you appreciate and value what professionals can bring to the table and without getting paid for the valuation and bidding process, there is no way anyone can do a good job for you. This is the list of some of the work you can expect from them.
1- Interview the seller/stakehold