Selling Your Company? Here’s How to Get the Best Deal

At a glance

• The main takeaway: Whether you are on the buy-side or sell-side, selling a business is a complex process that requires strategic planning, financial preparation, and expert guidance.
• Impact on you: To maximize the transaction’s value, business owners should define their exit strategy, optimize their operations and financials, strengthen leadership, and build a strong deal team with key stakeholders to help them navigate the sale process.
• Next steps: Business Acquisitions by Aprio can help business owners navigate the transaction process and help ensure the best-possible outcomes for both parties.

The full story:

It can take years to build a successful, thriving business from the ground up — and deciding to merge or sell it can feel overwhelming and even emotional.

Furthermore, the decision-making process can trigger a host of new and competing questions: When is the right time? How do you find the perfect buyer? What are the financial and legal implications of a potential deal? No matter how big or small your organization is, the sale process is complex — requiring thoughtful planning, skilled negotiation, and expertise across the financial, legal, and operational spectrum.

Whether you anticipate a transaction in the next few months or years down the line, preparation is key. Owners should start the exit planning process now by defining their goals, assembling the right advisory team, and completing these three steps:

1. Consider business exit options

There are multiple ways for owners to transition out of their business — such as merging with another company, selling to a third party, passing ownership to a family member, or even setting up an Employee Stock Ownership Plan (ESOP). When weighing their exit options, owners should consider how potential buyers will evaluate their business. Investors, acquiring companies, and strategic partners are looking for businesses with well-managed operations, stable revenue, transparent financials, and a professional leadership team.

At the same time, buyers will be on the lookout for red flags that could reduce the value of the business, such as:

• Poor financial reporting or non-GAAP financials
• A business model that struggles to scale
• Cybersecurity risks or past breaches
• Heavy dependence on a single customer or segment
• Hidden tax liabilities

To avoid surprises, it’s important for owners to clarify what they want from the sale: is the owner targeting private equity firms? Would a strategic buyer be a better fit? Is it more sensible for the owner to transition the company internally? Business owners should consider engaging a seasoned mergers and acquisitions (M&A) specialist to gain a comprehensive understanding of market trends, value drivers, and strategic insights into the market value of their business.

Finally, owners should visualize their long-term personal and professional goals and outcomes. Once the owner has a clear destination in mind, they can reverse-engineer the process to ensure a smooth and profitable transition.

2. Strengthen the business for sale

Before owners put their business on the market, they should take proactive steps to enhance value. Owners should invest time and money into strengthening their operations, expanding their customer base, and exploring product and service innovations to make the company more attractive to buyers. It’s also important for business owners to expand their customer and vendor mix and refine their internal processes for optimal efficiency.

Beyond operational and functional enhancements, owners need to professionalize their leadership team, improve collaboration, and even implement talent retention strategies to keep employees engaged throughout the sale. Buyers and potential strategic partners will be far more confident in acquiring a business with a capable and committed management team in place.

Moreover, one of the most critical aspects of sale preparation is financial recordkeeping. Prior to a sale, owners should enlist the help of experienced consultants and advisors to clean up their bookkeeping process, finalize financial reports, and prepare for an audit if necessary. With rock-solid financials, owners can help ensure seamless negotiations and prevent delays and surprises during the due diligence phase of the transaction.

3. Executing the sale process

Once the business is optimized for sale, owners can then launch the transaction process — a phase that typically takes six to nine months to complete. Owners should assemble a strong deal team that comprises all relevant stakeholders, including the board, financial advisors, M&A attorneys, and accountants. Under the direction of the business’s chief financial officer (CFO) or controller, the team should compile all pertinent financial and operational data and take pre-sale planning initiatives, including:

• A Quality of Earnings (QofE) analysis
• A compelling Company Information Memorandum (CIM)
• A targeted marketing strategy to identify qualified buyers and effectively position the company for acquisition
• Evaluating offers and negotiating terms

The bottom line

A competitive bidding environment can drive up the value of your sale, so work with your advisors to attract multiple interested buyers. During negotiations, keep your goal top of mind — whether that is maximizing the sale price, structuring a gradual transition, or maintaining some level of involvement in the company. As you approach closing, refer back to your initial goals to ensure the final agreement aligns with your long-term vision.

Whether you are in the early stages of considering a transaction or prepared to sell now, Business Acquisitions by Aprio is here to help you navigate deals with confidence, secure the best-possible outcome, and move on to your next chapter with clarity and success. Connect with our team if you want to learn more about how we can help you achieve what’s next.

Schedule a consultation with Business Acquisitions by Aprio now.

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