It’s your company, you built it up from scratch and now you are ready to sell it. What an achievement, something that not many people can say they have ever done. Selling your company is a big deal and if you position yourself well, you could make some excellent gains.
Here at Pivotal Scientific Limited (PSL) we know that when it comes to selling, no two business are exactly the same. You should consider two fundamental steps to help you decide if your business is now ready for sale:
What must you know before selling your business?
Company owners often think that their business is a potential goldmine based on perceived potential alone. They think have the best technology, that their products are the best, or that they have the best research & development team, but this is not how it works. Concept and potential do not provide any value in the eyes of most buyers.
It is a common misconception that buyers are impressed with revenue figures. High revenue figures can sound good, but when it comes down to it the only number that matters is the profit the business turns over.
Buyers are also not interested in how good your business used to be, they are more interested in recent performance, future sustainability, and viability. They will not be interested in fixing and recovering your business. But remember, if you have shown growth over previous years buyers would welcome growing revenue and profit figures, especially if you have made future plans for the business that seem realistic based on past performance.
Positioning Your Company for Acquisition
As previously advised, the more you have planned for the sale of your business the better as ‘quick’ sales usually generate lower sales prices. Companies looking to purchase your business will want to do due diligence and it can take months for the entire process to close. The more you have prepared the smoother this process will be.
As a business it is important for a potential buyer to see that you have strong teams in place, and investment has been made into systems to track key metrics. After all, the most attractive companies are those that are predictable and steady. If your potential buyer can assume operations and continue making good revenue and profit from day 1, your company is in a great position.
Attractive companies are both profitable and reliable. So, what is it you are selling? Is it that novel technology that you have already built a very loyal customer base for and can show good sales and profit growth against, is it that research & development team you have built that has some industry leading science in development, is it your customer base, your recurring revenue? What would your investors be interested in? Focus on this and make them as attractive as possible.
Having a strategic fit for your buyer is another important factor. Poor strategic fits between companies and buyers turns into drains on resource, time, and morale. Be willing to walk away from a buyer who seems like a poor fit as this could spell disaster for everyone involved, accompanied by loss of revenue, customers, employees, and time.
There are a number of quotes that come to mind:
“By failing to prepare, you are preparing to fail.” – Benjamin Franklin
“Before anything else, preparation is the key to success” – Alexander Graham Bell
Since 2019, we have completed 60 biotechnology strategy reviews, undertaken 20+ sell side transactions & 30+ buy side projects., and can help you prepare your business for sale and also through the buy or sell process. Pivotal Scientific offers both preparation and M&A services to help shareholders of independent businesses prepare for sale and ultimately achieve the optimal transaction.Discuss your project