Exit and sell

Written by Klaus Enke

Your context

How do you get the best deal for yourself and your shareholders …. and at the same time take care of your committed employees, partners, customers and stakeholders? Maybe you have been approached to sell your company (or a part of it) and you want to optimize the value for you and your team?

Selling is often the biggest decision in your career. Very few CEOs have been through more than a couple of exits. This lack of experience results in a large percentage of failed transactions or companies selling for much less than they should have.

Private equity companies and strategic buyers often have bought dozens of companies – they’re usually extremely good at it. You need a deal team that is at least as good as the team on the other side of the table.

How we can help

Many of our conversations with prospective clients begin with coaching on how to best prepare their company for a sale in order to achieve maximum value. We often start working with companies many months, or even years, in advance of their eventual sale.

Being strategically and operationally prepared can make the difference between a successful company sale and not getting a deal done at all.

Because at the end what matters is closing. Closing demands attention to 100% of the details. Packaging your business, defining a market, qualifying buyers, anticipating problems, negotiating the best terms, defending value, managing momentum, mitigating emotion, sweating the details. What differentiates us is that we have vast experience on both sides of the table, as operators AND advisors with a single focus on the software industry.

What are our top five tips for tech companies preparing for sale?

1. Engage the best team to plan and execute your exit strategy. You need a team that is at least as good as the team on the other side of the table. Look for specialists, not generalists with experience in your market. Make sure the chemistry is right and you enjoy working together. 2. Don’t let the exit process distract management from their most important job: Meeting, and hopefully exceeding, the financial projections – this should have the highest priority. It is our job to manage the M&A process so that you can concentrate on your day job. 3. Get “your house in order” and prepare for due diligence. Due diligence is a process that allows the buyer to verify the representations made by the seller upon which an offer has been based. Buyers will exhaustively review all technical, operational, and financial records looking for undisclosed problems, flaws in accounting practices, and verify ownership of intellectual property. This protects both buyer and seller from a range of expensive liabilities. And even if the sale falls through, tidying up the back end of your business is definitely time well spent. 4. Competition drives results. The most effective way to maximize your company’s value in the short term is to have alternatives, including not to sell at all. Nothing motivates buyers to keep the transaction on pace than he knowledge about the aller having real options. 5. Don’t assume the deal is done before it is actually completed. When an LOI is accepted there is a distinct change in buyer behaviour – glasses once half full become half empty. The increased presence of advisors (accountants, bankers, and lawyers) can produce conflicting information and negative viewpoints. This dynamic can impact the price and the ultimate decision of whether or not to proceed. An experienced M&A professional plays a critical role in managing the effects of change in the mindset of the parties during this phase.