By Kison Patel
Over the past decade, I’ve had the opportunity to work with countless executives and CEOs undergoing the extremely complex, all-consuming, and intricate process of selling their company.
As the CEO and Founder of a software platform that helps manage mergers and acquisitions (M&A) and as a former M&A advisor, I’ve witnessed a variety of successful exit strategies, along with a handful of unfavorable outcomes.
Ideally, M&A transactions benefit all stakeholders, employees, and the overall strategic growth of the acquirer as well as the captured asset. However, planning and executing such an acquisition requires organization, proficiency, know-how, and an extreme amount of focus.
These ventures are as time-consuming as they are intricate. While executives concentrate on conducting a successful transaction, they must still perform their responsibilities of running an organization. This balance can be extremely difficult to master.
This is why I’ve compiled a list of 10 actionable steps built from my industry experience that can clarify and organize the process for executives in the midst of an acquisition.
1. Clearly define the goals of the sale
Assuming that your organization is in the appropriate stage for such a transaction, selling a company can be an incredibly advantageous exit strategy. The first step of any sale is to clearly define the goal. Why do you want to sell your company and how would you like your asset to evolve in the hands of its acquirer?
Identifying both the financial and strategic motivations will allow you and your team to remain focused on the bigger picture, unite efforts, and lead to better decision-making. This goal should become somewhat of a “North Star” for your transaction.
The goal of your exit will likely define the types of buyers you are interested in pursuing. If you’re selling your organization mainly for financial reasons, a private equity firm may be your best option. However, if you’re looking for a more strategic exit, as you’d like to see your product grow and develop, you may be looking at more transformational buyers like Google or Amazon.
Consider the strategy for why the company is being sold and what you hope for the future of the asset you created and fostered. Establishing this story will clarify your intent, strategies, and marketing.
2. Decide on an appropriate value
Naturally, the next step is to evaluate what your asset is worth and decide on an acceptable offer range. Organizations can conduct such an evaluation in a few different ways. However, I highly suggest obtaining an assessment from an investment bank, whether or not you plan to use them for the transaction itself. This will allow for a thorough, unbiased, and knowledgeable assessment of your company or asset.
Such an evaluation will provide leverage during negotiations and aid in decision making.
3. Value enhancement
It is highly beneficial for an organization preparing for a sale to go through a value enhancement process. This simply means addressing and strengthening any underperforming or vulnerable areas within your organization. You may be acutely aware of these problems or they may be introduced during a formal assessment. What actionable steps can you, as an executive, make to enhance the value of your company?