5 Common Issues Surrounding an M&A Deal
If you are thinking of selling your business, it pays to plan ahead. Understanding common issues surrounding M&A deals before entering the market can help set you up for a lucrative future deal to meet your exit objectives.
Doeren Mayhew Capital Advisors shares five things every seller should know about completing an M&A deal.
1. Know Your Most Beneficial Timing
Business owners will never know the “perfect” time to sell, but typically, it is when a business is on the rise. Profitability and high growth attract the buyer’s eye. In some cases, once a business has reached its peak, the buyer will begin to question how much of the business is left to grow.
2. Be Aware of Perceived Versus Actual Business Value
Often when deals are on the table and the seller is experiencing rapid growth, his perception of business value changes, and deals fall through the cracks. Keep in mind that the economic and industry climates are never certain. Also, maintain accurate financial information and update normalized numbers monthly to produce a realistic valuation of the company.
3. Always Be Prepared to Sell
Simply said, “You never know when a buyer will come knocking with the right sale price.” Therefore, owners should run their business in line with eventual goals to sell. Whether your timeline is 90 or 900 days, you will be increasing your business value to potential buyers.
4. Consider Your Personal Goals
There are many personal questions to ask, including, “How will selling my business contribute to my desired personal goals? Will I have enough money to live comfortably once I sell?” If you answer “yes,” then you are ready to sell. If you answer “no,” then continue focusing on building business value.
5. Consider Your Management Team
Buyers always ask, “If I buy your company, and you are leaving, who will run the business?” Most buyers, particularly a private equity group, will want to ensure a strong management team is in place, whereas a strategic buyer may already have a team.
To gain more insight on the M&A process and how to prepare for it, contact the investment bankers of Doeren Mayhew Capital Advisors.