Behind each successful business company, there is a lesser-told story. There is a trail of hundreds of small acquisitions made from the point the business was established up until now.
On the way to the top, powerful businesses eat up startups – companies that either complements their core product or service, represent a great investment or compete with them. You may never learn the name of the startup, however, their founders may also never end up on the New York Stock Exchange.
For entrepreneurs out there, selling the company and getting acquired can represent a solid business strategy.
Getting acquired can be a great way to exit, as well as, gain liquidity. You will also free up energy and time and be ready for future ventures. But, this is also a complicated process and comes with a lot of pitfalls. For some businesses, it is not the best fit.
Here are a couple of lessons to keep in mind about the acquisition process.
1. Are You Ready to Sell Your Company?
You are a business owner. You invested your time, money, blood, sweat, and tears into building your own company. Do you want to see your business develop and grow or you are ready to do something else in your life?
It is a difficult decision, I know.
For some entrepreneurs, there is this point when you are just done with running a company and having so many responsibilities. If this is your case, that is the perfect time to sell your company and make your exit. However, if you still loving what you do and taking joy from managing your people and handling important decisions, it is not the right time.
Besides your personal needs, there is also the market to consider. You need to be aware of the trends, as well as, consolidations going on the market. You never know, your competitors might be setting the stage for something new.
Heartland, for example, is a huge and powerful corporation that buys up dental offices. Those businesses who haven’t been acquired are going to have a hard time competing.
2. Build Your Dream Team (And Make Sure They Know Exactly What They Are Doing)
If you want to get a fair value for your company, consult with professionals.
Let’s face it – most business owners don’t know how to sell a company. This is your baby and if you penny-pitch, you will pay for it in the long run.
Relying on your family lawyer is not smart. If they are familiar with your business niche or industry, you may ask him for advice, Your bookkeeper may do an excellent job, however, he might not be experienced to negotiate a multimillion-dollar sale.
The best thing you can do is to hire a specific mergers-and-acquisitions who specialize in company transactions. These experts will not only keep things under control but they will have a list of buyers who might have an interest in your business. Usually, these brokers work on a commission basis meaning you won’t be out of pocket for their professional expertise.
3. Get The Best Value
If you’ve decided that getting acquired is best for your company, the next move is to plan ahead with an acquisition in mind.
You need to actively position your business to fill a hole in the market and attract potential investors. This strategy can reap big dividends.
Did you know that the value of international mergers and acquisitions reached $3.9 trillion in 2018 which was a record-breaking year?
Ideally, you want to sell your company on the way up and not on the way down. The offers from investors will reflect what your business could be worth, rather than what it’s actual worth. The same deals and offers come when interests are mutual and aligned.
For example, does the buyer want to stick around after the sale? If yes, it means that the buyer is really interested in your business and will take care of your brand. If not, your business is not important and he has other plans.
4. Check Your Emotions
How many startups, successful business, and entrepreneurs walk into Shark Tank presenting their business and end up blowing their valuation because of their emotions?
Your company is your baby. You’ve worked so hard to build a business from scratch, you’ve carefully selected your team, you’ve completed your responsibilities on time and now you have to sell it. It is not easy, but once the decision is being made, you need to gather your emotions and proceed with a clear head.
But not keeping your emotions at the door, the acquisition process may go wrong.
Remember data is kind. Inform yourself about other businesses, what is happening in your industry, and what other companies have sold for.
Business deals should be about numbers, not feelings.
The truth is, we are living in the acquisition age. Successful organizations are hungry to get to the next big thing while startups are having a hard time competing. For entrepreneurs whose happiness is building a business and not sticking around to run it or watch it grow, getting acquired is a great option.
The best advice – do your homework. Sometimes, a little preparation can mean the difference between starting from scratch and a nice nest egg. Gather as much information as possible, compare, and decide what is best for your business company.
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