Many business owners reaching the end of their professional career should get familiar with the selling process of a company. Without a doubt, this is a complex process that has to be dealt with extreme care and attention in order to protect the main interest of the business owner: selling the company at a fair price.
Taking into account that all the phases of a corporate operation are highly important, in the following article we will analyze the most delicate points present during this process. This way, you will be more prepared for when you consider selling your business. These points are the following:
Maybe you never thought about how to value your company because you were not aware about the importance this factor has in the M&A world. Nevertheless, knowing the value of your company is vital for a successful sale.
A lot of business owners ignore the importance of making an in-depth valuation analysis, this is essential not only for a good sale but also so that we can apply improvements within the company and upgrade its performance. Generally, what we believe a company is worth differs with what it is really worth.
The valuation of a company is a technical analysis that requires a deep and fundamental financial know-how. The first step is to determine the characteristics and factors that provide value to your company so an educated guess can be made. If you want to know more click here.
It is an important first step for starting a corporate operation in the right way. If you want to read more on the topic go to our article “How to value a company? The usefulness of the business valuation process”.
It is important to know how to value your company, but also finding an ideal buyer for it. You need to find a solid offer as well as a buyer that will transmit confidence and tranquility to the business owner. And this is no easy task.
The search of the perfect buyer and a good negotiation are key elements for a successful sell that reflects the hard work of the business owner. That is why it is important, first, to avoid falling in the mistake of selling the company to the first counterpart that makes an offer, and secondly, to know how to identify a good alternative.
The question is: How? This general overview can help.
Knowing the profile of the businessperson or entity that is willing to buy your company is key. The 6 main types of buyers are the following:
Analyze or identify what type of buyer is suitable for you is not easy, therefore it is important to know the different interests each buyer has and if your company matches them. Due to this, it is important you are aware of the following matters:
However, how can we answer these questions? We recommend you to apply the following tools:
Nonetheless, this step does not end here. It is extremely important to know how to use the different methods that will make you able to identify the perfect offer and negotiate a benefitial transaction for both parts.
The next thing we will do is understand one of the most delicate concepts inside a corporate operation: the due diligence.
One of the main points during the selling process of a company is the due diligence. During this phase, the level of transparency and precission from the seller should be extremely high, as it is here where the buyer will be able to see in depth and full detail the company he is about to acquire.
It is a crucial step where all the process can collapse or keep on going. This is why it is of extreme relevance to know how to manage this step.
In other words, the due diligence is an analysis of everything that is under the tip of the iceberg of the company to be acquired. Due to its level of delicacy, we recommend you to manage it with extreme caution, and if possible with the support of a professional advisor.
You would think that after the test of the due diligence the process would be over, but there is still left one of the key parts of the process: the sale and purchase agreement (SPA).
Once the buyer determines the real value of the company that will be acquired and the due diligence is finished, it is time to decide the selling price and prepare the sale and purchase agreement (SPA) of the company. This requires of a lot of care and meticulousness.
One simple paragraph can make a successful operation become a failed one. With this in mind, the SPA is not something to take lightly due to its complexity. The most frequent question is: what is the content of the agreement?
Generally the agreement is made up of 5 sections:
Each of these sections have a high level of importance and they should be perfectly executed to assure a successful operation. We invite you to know more about them in the following article.
Knowing how to sell a business can be complicated, that is why we want to clear all the doubts you may have regarding the selling process of a business so you can focus on taking the best decision for your future and the one of your company. We wanted to take the opportunity to tell you with full details the acquirement of SumaCRM by Efficy. You might be wondering what is unique about this operation, and the truth is the story behind it is really special, as from the blog of SumaCRM they retransmited weekly the whole selling process with real data and full detail.
