Thinking about selling your company?

When you think about your business today or in a few years, are you still in the picture? If you are having thoughts about selling your company, the first step in what will be an interesting journey is deciding on your goals. You will need to include not only your business partner(s) in the discussion but other stakeholders including your immediate family and possibly your senior management team.

What are Your Goals?

1. Maximize the sale price.

2. Protect your employees to make certain they can still support their families after the sale.

3. Get out as quickly as possible - often but not always this is driven by other life events such as health issues.

4. Sell the company but continue working on the things you really enjoy doing in your business whether that be sales, engineering, coaching staff or whatever gives you a great reason to stay involved in your company after the sale.

None of the four options above are mutually exclusive and often entrepreneurs are looking to achieve multiple goals such as maximizing the sale price, protecting employees and creating a part-time consulting role for themselves after the company is sold.

Once you have decided on your overall goals, there are at least four paths you can follow to sell your company, not including the easiest, but messiest one, do nothing and leave it up to your heirs.

Selling the Company

1. Sell the company to a 3rd party such as a strategic buyer (competitor, customer or supplier) or to a financial buyer (a family fund, venture capital or private equity group) or to an individual investor looking for a business to run.

2. Sell the company to your employees.

3. Sell or otherwise transfer ownership and control of the company to your children or grandchildren.

4. Wind the business down.

Like most things in life, the decision to sell your company isn't easy but thinking through your goals and then looking at the various options to sell the company will put you in a better position to manage the stressful process of selling the business you have grown over the years. The options outlined above are not necessarily mutually exclusive, for example you might want to position the company to ensure your management team has an equity stake in the company alongside the new buyer.

Finding the Right Investment Banking Team

Next you will need to put together a team to manage the process of putting all of the information together for a buyer to review, marketing the company as broadly as possible, negotiating on your behalf and managing the due diligence process through to the close of the transaction. Make no mistake about it, this is a full-time job which will be difficult if not impossible for you and your team to manage while still managing the business full-time. Think of hiring a professional investment banker to quarterback the sale from beginning to end - we suggest you interview two or three investment bankers to determine the best fit in terms of personal style and professional acumen. You will be working closely with the investment banker for what is typically 12-18 months from start to finish and a good fit is critical. What should you look for in an investment banker?

• What size company have they quarterbacked in the past as a manager and as an investment banker?

• Review the LinkedIn profiles of their leadership team to get a feel for their network as it will play a critical role in their ability to find your ideal buyer.

• Are they personally involved or is all of the work going to be done by analysts and associates you haven’t met?

• Do they have any experience in your industry?

• Ask to speak to their most recent client to better understand how they support clients.

• Are they available to meet in person as well as by phone or Zoom?

• Will they provide business advice on the quality of your management team, systems, processes and overall strengths and weaknesses? All of these are vital to helping you achieve your goals by knowing what needs to be done to improve the attractiveness of your company to a buyer.

• What are their fees?