Selling Your Company: The Important Stuff

You Have to Be on Top of Things When You Plan to Sell Your Company, Especially the Important Matters

Companies set up by founders usually change hands. At times of need, the founders or first shareholders would agree to sell off the company for many reasons only they know. But before all of that can happen, comes the complicated process of closing the deal. It all begins with the offer. Here are among the concerns you have to give your full attention when selling your company.

Everything is Negotiable

No matter how enticing the numbers are in the first place, negotiate. Make a counter offer to the buyer and casually discuss the terms. If the buyer is keen, he or she will continue negotiating. But bear in mind that the negotiation will take into account the following factors:

• Company growth compared against competitors.
• Everything that has to do with the financial statement of the company.
• Any legal risks that your company may face.
• Are there multiple bidders for the sale offer.
• The management team’s expertise.
• The technology that your company owns.

It is Time-consuming When Selling Your Company

From the moment you get queries from interested parties to finalising the deal, the whole process will take up a lot of your time and effort. There are several things you can do early on to hasten the process, such as:

• Ready an online data room with all contracts, corporate records, financial statements, patents and other information in it. It is only accessible by pre-approved individuals. This is where the buyer and its team will spend their time going through the necessary documentation. A note to remember, it is best to have an expert merger and acquisition lawyer to advise the information that needs to be in the online data room. It is also best to practise to fill up the room with data required before giving access.
• Your company leaders, such as CEO and CFO, must be ready to explain the added value of the company as well as financial questions.
• Hire a lead negotiator who is well experienced and can make decisions on behalf of the company.
• Always do your diligence before a buyer does it for you to minimise delays when the buyer vets through all documents.

The Financial Statements

All of the financial statements must be in the pink of health. Always do your diligence in this area because the buyer’s team will scrutinise every single document. They would go through it thoroughly to ensure that they are buying a company worth the offer price.

Multiple Bidders

The number of bidders interested in buying your company can become your leverage. With multiple bidders, you can negotiate with them and compare their offers. At some point, you will have the upper hand to have the final say. Having one bidder is not always a good sign because you have no choice and may end up with less than you bargained for in the first place.

Intellectual Property (s)

When you agree to sell your company, you should bear in mind that any intellectual property (IP) is a property of the company. Hence, you should already have an extensive list of all the IP registered appropriately and does not infringe with any other parties’ IP rights.

Assemble the Team

In this team, there needs to be a legal expert in M&A, a great M&A legal team, investment banker, the lead negotiator, the chief executive officer and the chief financial officer. These key personnel will be facing the buyer’s scrutiny from A to Z.

Sensitive Issues

When selling off your company, your employees are the most affected. They will think that the new take over will not retain them. Thus, it is essential to highlight this matter and discuss what happens to the employees upon finalising the deal.

Closing It

The negotiation will take its course, and it will soon lead to closing the deal. You and your M&A team should always build a good rapport with the buyer’s negotiators. Never let emotions get in the way and remain professional and courteous.