The sale of a company is one of the most important moments in the life of a business owner. And it is one of those moments where the process must be as professional as possible. There are three keys to maximize the price of a company:
1. Find the most financially able buyer
The first key is selling it to a buyer who truly has the financial capacity for the purchase. Often, you might receive a buyer who has double the revenues you do and has a lot of debt. There might be a lot of interest, but what is likely to happen is that they will not be able to pay a lot because they simply do not have the resources. However, if you find a buyer who has $1 billion in turnover, $100 million in profits, and no debt, that buyer is sure to offer you a better price because the buyer simply has greater financial ability.
2. Look for synergies
The second key is synergies. This means finding the buyer that has the best synergies with your company, in addition to having the financial capacity for the purchase. This implies the buyer being able to sell your products to the same clients, selling your products to their clients, or opening a new market for your company. These are synergies that create value, which will be reflected in the price tag.
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3. Create competition
The last key is creating competition. It does not make any sense to sell your company to the first buyer that comes along. Rather, one should always look for other potential buyers, even though this search may be confidential. It is important that this research is done because otherwise, you will not have any negotiation power and this will be very obvious when it comes down to negotiation the sale price.
Therefore, at a time as crucial as selling your company, it is of vital importance that you find the buyer that has the financial capacity for the purchase, that has true synergies, and that you create competition among potential buyers who fulfill these requirements. Our experience shows us that this doubles the price of the offer during the sale process. Through 30 years of value creation, imagine doubling its value just during the nine months that the sale process usually takes.
This article was written by Enrique Quemada, President of ONEtoONE Corporate Finance.