Maybe you’ve decided that you’re ready to sell your company, and you’ll do whatever it takes to ensure success. We know that you’ve spent your life running your business and made countless personal sacrifices to get to where you are today. C Squared Solutions has been there, too. We know the stakes. We understand how important it is to you that the sale goes well. We are invested in ensuring you are well positioned to capitalize on your accomplishments.
Secrets to a Successful Sale Process
Most M&A advisors are purely transactional. They collect your data, package it, and present it to prospective buyers for review. At C Squared Solutions, we are a team of highly experienced advisors who will work with you through Due Diligence to review,analyze and correct any concerns we identify ahead of taking you to market. This allows us to maximize your purchase price potential and minimize or eliminate any potential discounting.
In order for us to do our job well, we must develop a comprehensive understanding of your operations. Don’t be afraid to share with us the good, the bad and the ugly. We may offer an alternative perspective for concerns you may have. Worried that you haven’t tapped a new market that’s been on your radar for the last three years, your sales force is too small, or that you can’t capitalize on new ideas because your R&D division is limited? That’s okay! We’ll develop a prospect list of potential buyers who are looking to leverage your strengths and are well suited to help you take that next step post sale.
If something comes up during the sale process, don’t keep it to yourself. Bring it to your advisor’s attention so that the issue can be addressed and corrected. It’s not uncommon for the unexpected to occur inside a sales process. Our advisors have seen it all and are well prepared to help right the ship.
Ways to Enhance Value
A sale process takes time and it’s important you ensure your existing operations are as strong as possible from start to finish.
One of the first things we’ll review is your customer list:
- Who are your top 20 customers and how secure are their contracts?
- What percentage do they generate of your total revenue?
- How many different industries and geographies do they represent?
- What percentage of today’s top 20 was on the list three years ago?
It’s always a good time for you to review these metrics and to remind your sales force about the value of going deeper with your current customers. If half of the list from three years ago is no longer present, ask why.
The last thing you want to lose is a key employee in the middle of your sale process. It’s therefore imperative you document into playbook format best practices and intellectual capital held by your leaders. If your top sales guy defects post sale and you have an earn out, you may be hamstrung to drive sales at the level you projected. But if you’ve documented their approach into playbook format, it will be much easier for another member of the team to step into their shoes and run their division without skipping a beat.
Most owners put their employees’ wellbeing ahead of their own. One of the first things a prospective buyer will ask for is a ranked employee list. Making sure you have the right employees in the right seats ensures a high performing team and job retention post sale.
Employees have a way of sensing when a sale is on the horizon. While we recommend keeping the news confidential until a deal is done, it’s always a good idea to check in with your team. The better your team feels, the smoother the transition will be to a new owner.
Common Mistakes to Avoid
It is not uncommon for operating companies to be contacted by prospective buyers ahead of initiating a formal sale process. Try to avoid sharing company data in advance with these folks as it’s harmful to have your data in circulation before your advisor has put the proper controls in place. Further, your advisor will want to create an auction environment whereby multiple buyers are primed to issue offers at the same time. You don’t want a tier-two buyer pressuring you to preemptively accept a sub-par offer.
Along similar lines, keep the deal confidential. It’s not helpful for word to get out before a deal is final. Competitors may put additional pressure on your customers and employees can get skittish worrying about what may happen post sale.
Owners are so focused on driving revenue that they often consider entering a new market or launching a new product ahead of a sale process. With few exceptions, this may not be the time to take a chance on something new. Instead, look to a prospective buyer who can take the lead or round out your existing portfolio. If you have questions about capital allocation inside a sale process, C Squared advisors are here to help.
Now that you know some of the keys to optimizing your sale process, it is time to focus on your existing operations and make sure they are as strong as possible.
