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If you are thinking about selling your business, here are six essential steps to take first:
1. Define objectives and options. As the seller, you must have clearly defined goals and understand all potential opportunities before undertaking this process. Think creatively regarding your options and take your blinders off!
2. Prepare documentation. You or your representative must prepare the necessary documentation outlining the business and its unique attributes.
3. Research acquirers. You must have an idea of the kind of investor or business that would be motivated to pay a premium for your business. Sometimes the most obvious acquirers are not always the best candidates.
4. Control exposure. When approaching potential acquirers, have a confidentiality agreement in place. In dealing with potential acquirers, you should stress elements of the business that are aligned with each acquirer’s growth strategy and investment criteria.
5. Understand negotiating and deal structuring. Never provide an asking price, keeping in mind that the first offer is rarely the best. Also, deal structure can be more important than price! Work to create an environment that creates a sense of scarcity and urgency on the part of the acquirer.
6. Prepare for due diligence and closing. After a letter of intent has been agreed to by both parties, the buyer will be looking for accurate, truthful information about the business. Anticipate what the buyer will request and have those items and information readily available.
It’s true the environment for selling a business has changed over the last few years, but with the proper preparation and knowledge you can exit your business and reap your desired outcome.
Allan A. Siposs
FMV Capital Markets
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