When should I start exploring the sale process and how much knowledge do I need beforehand?
Selling a business is a complex exercise, and only a small percentage of entrepreneurs are ultimately successful in starting, building and selling their companies. Preparation is critical, so you do need to plan ahead. A rule of thumb would be to identify a date when you would ideally like to exit your business and then work backwards from there – at least two years. This will give you a target date to begin preparing for and exploring a sale process.
It is important to start planning early, but you will not need specialist technical knowledge of the business sale process
While you will need a full and detailed understanding of the business you are selling, you will not need to possess the specialist technical knowledge of the business sale process itself. M&A expertise, advice and support should be provided at all stages by your advisors, including your M&A advisor and your corporate lawyer.
Evaluating all options
There are some key questions to consider as you begin to explore a sale. To mitigate risk, an acquirer may wish to keep you in the business for an extended handover period post sale. Could you avoid this if you made some key senior level hires now and transitioned yourself out of the business? How is your business performing today, how might it be performing in a year or two, what might you do now to influence that performance and therefore the value you might realise by the time you come to sell? What else might be improved in the meantime?
A corporate finance advisor should be able to help you answer these questions, fully evaluate all options and provide you with an exit perspective on key business decisions you might need to make. Start planning early and you can take control of the timeline, and ensure the business is in good order from a governance perspective. You can also begin to work with a corporate lawyer to tidy up contracts or employee handbooks, for example.
You are embarking on one of the most important journeys of your life. For your own peace of mind, ensure you allow plenty of time to make informed and considered decisions.
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