Begin with the End in Mind: Planning for Your Business Exit

Begin Conversations Early With Brokers and Bankers

The size and nature of your business can sometimes determine the type of outfit you will seek out to aide in the sale of your company.

If your business is substantially large, you’ll most likely require the help of an investment bank or corporate M&A law firm. Fortunately, most of the business assets that exchange hands regularly do not require as much regulatory oversight. However, having early conversations with experienced merger and acquisition professionals is helpful in getting the ball rolling.

Some internet acquisitions and software mergers are anomalies in the sense that they can grow rapidly and sell quickly.

Unfortunately, the exception should not be treated as the norm.

Most businesses grow slowly and at a normal pace and sell just as slowly. For those whose businesses do take off rapidly and are able to amass a high volume of cash flow early may be acquired more rapidly. In this case, knowing who your M&A representation will be at the time of sale is extremely important.

Know Your Niche

Most entrepreneurs have either worked in an industry, see a need and fulfill it or they find a general pain and solve it in an innovative and unique way.

Larger entities are always ready to snatch up processes, IP, cash flows and competitive advantages by acquisition. This is why knowing the people, companies and leaders within your niche is helpful to maximizing your payout when it comes time to sell.

Here are a few specific pointers:

1. Begin networking early. Meet with CEOs, presidents and managers of companies in your field, even the competition (if it’s not too dangerous)

2. If you are profitable, let them know about your successes

3. Make regular contact with them, inviting them to milestones

You never know where such relationships could lead.

Selling your company can be the most rewarding moment as an entrepreneur. It also represents the largest and most complex sale you may possibly encounter.

Beginning early with the idea that your company will one day be put on the market, helps to cultivate a sellers mindset.  This can, at the very least, make the transition occur a bit more smoothly.

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Photo: H&M

Nate Nead is a Director with DealCapital, a mid-market merger and acquisition advisory firm based out of Seattle, WA. He assists companies in the sale and divestiture of business assets. He holds an MBA from the University of Washington.