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What factors are most critical to evaluate when deciding to sell your business?

Answers

Anonymous
(Controller) |

Hello,

It depends on the type of business and business model and the buyer. If you are a start-up, the buyer would look at your IP, customer relationships and potential of revenue. In this market it would like to see some success. The buyer would also look at the market potential and your competition and assess if you can be successful. The more mature the business is, the more important cash flow generations will become.
If the buyer will operate you as a stand-alone business then your mid-manager level employees will be a key asset and probably they will require that a certain percentage of your workforce will accept an offer under the new management. If the buyer folds you in the current operations then they will look were they can save money though integration and how easily can they integrate your business.

Please feel free to ask more specific questions.

Evelyn

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

I agree with Evelyn, and would add EBITA, industry, industry trends, the level of sophistication of the client company and the quality of their books.

Mike Adhikari
Title: Owner
Company:
(Owner, ) |

Assuming you are a profitable middle market company: here are few things to consider to maximize value: EBITDA, thin balance sheet (low WC, low CapX), sales growth, quality of earnings, ability to forecast and achieve it, management depth, reducing risk factors (concentration of customers, channels, talent, technology, equipment, customer contracts etc.), owner vs. management decision-making, inventory accounting, GAAP compliance, audited statements, growth opportunities (through market share or penetration or market expansion), scalability, risk of confidentiality (how to mange critical information disclosure in case the deal does not close), intra-shareholder issues, who is going to stand behind reps and warranties, management expectations if they are critical to continuity, etc. In my 25 years I have never seen two deals alike. I-bankers are involved in large transactions even when both parties know each other. They are acting as advisors. Same is now happening for smaller deals.

Topic Expert
Stephen Roulac
Title: CEO
Company: Roulac Global LLC
(CEO, Roulac Global LLC) |

Among critical factors are:

1 Motive to sell: what stakeholders...primary investors and mgt. team... expect/desire to accomplish and how selling may enable you to do so
2 Musts from sale: $$$, control, roles, relationships...plus the 'not acceptables'
3 How sale may influence...+/-...strategy, growth, competitive position, customer relations, staffing, etc.
4 What business would be like if sell....or not sell

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