Selling Your Company is Like Selling Your House
After a few crazy years where it seemed like anyone and everyone was being acquired, the market has moved to a new phase of activity. At a networking event, I asked some M&A folks how they thought the market was doing. Still busy but more selective is the feedback I heard.
Selling your company is like selling your house. After a few crazy years of throwing all cash, no home inspection, over asking price bids….we now are in a place where buyers are still paying, but they want that home inspection. More deals are falling apart in the murky middle (i.e. after the initial offer is accepted and we start really kicking the tires). It’s the home inspection and remediation phase of the process.
So what can you do to make sure you are crossing the finish line successfully and at the price you wanted (within reason)? It’s time to put on fresh paint, acknowledge your issues, and be really clear on value.
- Fresh Paint. Ideally, this is a new contract win for 3-5 years of performance left. Nothing is sexier than steady cash flow and paying customers. Fresh paint makes everything look better, including that backlog report.
- Staging. Prospective buyers want to look at a house that is ready for the sale. They want clean data, they want easy-to-understand information. Sellers have to get their house in order to respond to the inevitable million data calls that come with this transaction.
- Contracts are easily pulled and summarized in a spreadsheet with basic info for quick ease.
- Key Employees are identified, resumes are available, and thoughts on retention bonuses are documented.
- BD Pipeline is as verifiable as you can make it. This is not the time for pie-in-the-sky, eternally optimistic thinking. Realism goes further with the potential buyer.
- Internal Systems are documented. What are your systems of record? Combine all in a quick easy-to-read spreadsheet for the basic info (payroll, HRIS, CRM, Accounting, Timekeeping Systems, brokers, insurance held, etc.).
- Issues. Known issues with your company (investigations, pending litigation, etc.) should be disclosed upfront. Don’t wait for the home inspector to find these out. They will find them which will result in a lack of trust from your lack of transparency.
- Emotion. Selling your beloved home/company is hard. It’s emotional. Your kids grew up there. You spent hours on the weekends on home improvement projects. For companies, it’s your baby. You grew it from the beginning and remember how hard you had to grind to get it to this stage. You emotionally think that all of that back-breaking work should be considered in the sale price. The reality is that the value of your home and your company is only as much as what someone is willing to pay. You don’t have to take their offer. But your buyer doesn’t care how hard you worked.
Sometimes you aren’t ready to sell. Sometimes the market conditions aren’t ideal. In that case, do a few home improvement projects to build value. Explore new customers, new offerings, and new teammates. Streamline your practices. Update the kitchen so to say. You may find that these updates make you want to stay in your house/company a little longer. That’s fine too.
Whether you are in the home improvement stage, prepping for sale, or ready to list, BOOST can help your organization understand the detailed planning process required for a successful transaction. BOOST’s SMEs specialize in providing enterprise-wide M&A services and post-transaction integration support. Contact us to learn more about our M&A services and connect with a SME.
About BOOST’s CEO, Stephanie Alexander
Stephanie Alexander has spent more decades than she wants to admit supporting high growth government contractors with an eye towards their bottom line. She is the CEO and founder of BOOST LLC which supports back-office functions for government contractors. She is a co-founder and Partner at govmates, a free teaming platform and technology scouting tool to connect business across the federal landscape.
