Use time as a friend to prepare your company sale messaging
When the day comes that you want to sell your company, you will want to be well prepared with how you will answer the most obvious of questions you will get asked. You don’t want to be caught off guard with any of these questions as that could impact your deal overall.
We work with clients to help them think about and prepare for their messaging that will be critical to attracting and exciting an acquirer. Here are the types of questions you’ll want to give thought to ahead of your exit as you will very likely receive all of these and the answers could impact how excited an acquirer gets about buying your business:
- Why have you chosen now to explore selling your company? This is the very first question a savvy acquirer will have as the answer could indicate to them at a high level what might be happening within your business that could excite them or concern them.
- What are the future growth prospects for your company? An acquirer may wonder if you’re selling because you believe you’ve hit the limits of where your company can go and they will then have the risk of figuring out where to take it next. Excite them by articulating where and how your business can continue its growth trajectory.
- Where is your company truly unique versus your competitors in areas that the customer truly sees value in? And in answering this question, ensure your information is current because often times owners/sellers will say they have a competitive uniqueness but lack great external situational awareness and don’t realize competition has replicated or exceeded what was once unique. Don’t assume a potential acquirer will know where you’ve built a unique capability, it’s your job to convey it.
- Are you willing to take some of the proceeds the acquirer will pay to buy your company and invest them back into the business or a new entity they are creating as a result of acquiring yous? Acquirer’s may test this concept to see how confident you remain about the future potential of your business – owners willing to reinvest, even a small amount, send a strong signal of confidence in the future of their business.
- How will your key managers and employees respond when they hear you have sold?
- How will your best customers and suppliers react when they hear you have sold?
- Who on your team of key managers/supervisors is critical to the ongoing success of the business and the acquirer will want to get them locked in to place in terms of working for them going forward?
- Where is the next round of investment required in your company? The acquirer will want to know how much capital, beyond acquiring your business, they might have to put into your business to take it to another level of growth. You have to really think this one through because if you identify meaningful investment needs, it will definitely impact the acquirer purchase price.
- Where do you see risk in your company going forward? An acquirer will want to hear your view of the risk you may or may not see because if there is risk, it could soon become theirs to manage.
Of all of these, the one that sellers of privately held businesses most often fall down on is their inability to message a succinct and logical reason for deciding now is the time to sell their company. The answer to this question has to shut this question down, not provide threads that the potential acquirer can pull on. Give us a call and we can help you think through the compelling narrative for your business because it’s not something you want to do while attempting to sell your business.
