Preparation – the Way to a Successful Sale

After reading story upon story about how companies don’t know how to handle an unsolicited acquisition offer, I thought it was about time we all heard a story of a company doing it right.  While we know that selling your business can be a stressful and daunting experience, it can also be a straightforward and rewarding experience if you are prepared and organized.

Not long ago, a husband and wife team came to SDR for a strategic consultation.  He had worked in the business for over 20 years playing an integral part in the growth and development of the company.  Slowly he began buying up ownership until he eventually became sole owner.  Serving as President, he and his wife ran the company together, and while they remained successful, the long hours began to take a toll on both parties.  These long hours, and shareholder goals, sparked the strategic discussions about the company’s future.

They came to SDR seeking high-level strategic advisory and to gain a comprehensive understanding of their financial situation in light of their financial goals. In preparation for helping the owners obtain insights on their business, SDR completed a valuation (based on the current market and industry trends) and presented the client with two strategic options for their future.

Option 1 – the owners could choose to retain ownership and groom the company for sale within the next 3-5 years; if the value expectations could not be met by the market

Option 2 – the owners could sell the company; if the value expectations could be met by the market.

Meanwhile, in the midst of determining the best course of action the company was presented with an unsolicited offer from a financial buyer.   They assembled a team arming them with the knowledge, counsel and ability to make a decision.  By comparing the value of the company with the unsolicited offer they were able to negotiate the sale price accordingly and ultimately sell the company.

This company did it right!  Because the owners had taken the initiative to understand their strategic options early on, they were prepared to evaluate the unsolicited offer. They got a valuation, knew their options, assembled a team, developed a plan and were able to commit to a sale in record time (within 3 months of the initial offer the transaction has closed).

The complexities of a sale are significant. Educating yourself on your company’s worth and options and assembling a team of professionals that understand these complexities will reduce the difficulties and position you for success.  Understanding your company’s worth can be immensely helpful beyond the confines of selling your business; it can help you obtain capital, provide a view of your industry market, and give you a glimpse of where you stand against your competition.