Exit This Way: Nine Tips for Preparing to Sell Your Company
Angie Stocklin is the co-founder and former COO of One Click Ventures, an eyewear ecommerce retailer. Angie and her co-founder Randy launched One Click Ventures in 2005 and grew the company into a multi-million-dollar online business. Foster Grant purchased the company in 2018 to operate as a subsidiary of the world’s largest eyewear company.
“Is it time to exit?”
You’ve spent years building and growing your business when this question comes to mind. It could be
you’re ready to take on a new challenge. Perhaps the business climate is suddenly perfect. Maybe your
company found the happy intersection of quick growth and unlimited potential. Whatever the reason
for an exit, following are a few tips to make sure you’re ready.
Tip #1: Get Organized
The best time to sell is when your business is doing well, but don’t wait until it’s time to exit to think about your records and documentation. Organizing your data, files and financials early makes pulling them together for due diligence much easier.
Tip #2: Undergo an Audit
Not sure you have all the documents in order? A good next step is paying an outside firm to audit your financials. This gives you a chance to sort out any discrepancies before your potential buyer finds them and provides a sense of what due diligence will feel like. Presenting recently audited financials also provides buyers with some peace of mind as you go to market.
Tip #3: Prepare Departments for the Microscope
Don’t get too comfortable once the audit is complete. This type of intense scrutiny will be applied to every department in your organization during the exit process. Take time to organize HR paperwork, update your org chart, document departmental processes and procedures, and pull together sales and marketing historic data.
Tip #4: Understand Why You Want to Sell
Before taking a business to market, understand your motive for selling. The reasons for exiting are unlimited and you may have many. Understanding your true motivation is essential for appreciating what life looks like after the exit. If selling because you’re ready for a new challenge, an earn-out as part of the payment terms or moving the business to a new city may not interest you. On the other hand, if you’re selling because a larger company or firm could give you the cash needed for faster growth, staying with the company long term or taking corporate stock as part of the payment plan may be viable
Tip #5: Create a Unique Sales Proposition
Take a hard look at why someone would want to purchase your company. Do you have a unique product or proprietary technology? Is your team full of experts? Do you have a marketing secret sauce? Is the company a fantastic growth machine or profit center? Define what makes your business unique. Combining a distinct sales proposition with your motive for selling helps identify potential buyers and starts determining the business’s worth. Various industries and business types are valued differently, so how you package your business for sale can significantly impact valuation and purchase price.
Tip #6: Find an Expert to Shop the Business
Finding the right broker or bank to shop your business is important. Use someone with experience in mergers and acquisitions that you can trust. Ensure they have a strong understanding of your industry, business model, and sales proposition. Companies are presented with acquisition opportunities daily. Partnering with the right broker or bank that can present the unique value and answer questions makes sure the target buyers notice your business.
Tip #7: Understand Life Will Look Different
Once you start shopping the business, understand that your day-to-day work will look very different. Before starting the process, ensure team members can take over your critical, business-driving tasks and activities. Your time now will be spent gathering information, building models, deciding messaging, and doing phone and in-person presentations.
Tip #8: Think About Transparency
You will need additional help with the acquisition, so consider which teammates to bring into the process. Think about the entire staff and what communication they should receive. At least some level of transparency may be important, especially if your business has built that into its culture. Make sure employees feel safe and secure to keep the company running well.
Tip #9: Process Your Emotions
When selling your business, it’s easy to get caught in the roller coaster of excitement and exhaustion. However, you can’t lose sight of your emotions. Take moments of time along the way to process the sadness of handing over ownership, the gratitude for your team, and the fear of an unknown future. Anticipate what it will feel like to live in a world where your identity isn’t wrapped up in the company you’ve founded. Even if staying with the company post-sale, know that your day-to-day life won’t be the same. Find a licensed therapist, as I did, to help through the change. Even happy transitions can trigger cycles of grief.
Finally, make time to celebrate! You built a business worthy of sale. That achievement is rare, but hopefully very rewarding.
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