InSight

Exit and Growth Strategies for Middle Market Businesses

Someone Wants to Buy My Company – Now What?

By Dan Vermeire | Apr 08, 2013

Nest EggSomeone wants to buy your company – they even made an offer.  That’s great news!  Time to celebrate, right?  The answer is “maybe.”  Maybe that’s great.  But maybe not.

The fact is that entertaining an offer from just one buyer is probably one of the worst things that could happen.  Especially an offer that is unsolicited.  It’s true that sometimes you can improve the offer  just by bringing in a professional on your side, because the buyer often takes it more seriously.  However, with just one offer you have zero leverage, no other options, you don’t control the timing, you don’t have a team ready, and you aren’t prepared for a transaction. 

How did this happen?  In most cases it is because the business owner wasn’t looking to sell, didn’t have a reason to sell, or the business wasn’t “on the market.”  Then, why take the buyer’s call in the first place?  Could be curiosity, or the idea that “if the right offer comes along, then I’d sell.”  Really?

In today’s world, the right offer doesn’t just “come along.”  Any buyer is going to have professionals on his side that value the company at the “market level” and bring a commercial-grade proposal  (usually on the low side) which is often a waste of time. Remember, he approached you directly for one reason…to avoid competition for your company.

How can you get the right deal and be sure it’s at a premium?  Step one is to decide if you want a deal.  Assuming you do, then go get one – proactively, on your terms, and under your control – through the use of a carefully managed process.

The process begins with steps to create a good book about the company.  Analyze sales, financials and the company fabric a dozen different ways, and research all realms of potential buyers.  Anticipate and answer the questions before they’re asked.  Determine the ideal time for the company, the industry and the market to seek a transaction.  Then, through highly confidential methods, contact potential buyers and generate interest in the company.  Manage the process so that you receive several offers at the same time.  Then, you have all the options: negotiating leverage, control of the timing, and the team to complete the deal.    

Any of the professionals at CFA can help explain these transactions and what you can expect.  Contact any one of us to learn more about getting prepared – and controlling the process for your own benefit.

Posted by Dan Vermeire.

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