Situation: A CEO has hired a banker to advise on the potential sale of a privately-held company. What else should she be doing in advance of the sale? How do you prepare to sell a company?
Advice from the CEOs:
- Prior to moving forward with a banker, it is necessary to prepare a privately-held company for sale. Get an advisor – not a banker – to assist you. Search online for a good mergers and acquisitions advisor. If you know CEOs from other local companies, network with them to discover high quality advisors.
- In selling a company, the final deal must provide for the survival and continuing effective operation of the company. A buyer may want assurances from you, or assistance in the transition. This can have a significant impact on your final payout.
- Be prepared for the reality that you or someone else within the company will have to remain with the company post-sale. If this is to be another person, this individual will be very important to you during the negotiation process with potential buyers. Keep this individual up-to-date with your intentions and plans.
- A company is more than numbers – it is a story. The story must be very crisp and compelling.
- The buyer will want to perform due diligence before offering you a price and setting conditions on a purchase. This may involve more than you and your top managers. Communications within the company will be critical to keeping managers and employees informed and on-board.
- You will want to have two or three potential buyers, both in case a top prospect fails, and to assure competition and a higher sale price.
- Think carefully about your next move from a personal standpoint. Being at leisure may not fulfill you. What do you really want to do for the next segment of your life? This is far more important for you, personally, than you may estimate.