Going through an M&A process can be an intimidating journey, even though the different phases are well determined there is always the possibility of falling into beginner’s mistakes. These are the 5 mistakes to avoid in any process in order not to ruin the sale of your company.
A business is not sold every day, the entrepreneur will usually have thought deeply about the pros and cons, and above all will have considered the benefits to be gained from the sale.
In order to obtain these benefits, it is very important to execute a process without errors.
At AddVANTE we believe that the key to any sale lies in the process and in avoiding errors in its different phases.
From our point of view, these are some of the most common mistakes to avoid:
Not doing your homework on day 1
- Before starting the process of selling your company, it is essential to understand what the process is like, to familiarise yourself with the different phases and the jargon of the advisors who will be passing through or giving their opinions throughout the process. Try to minimise the opinions of people who are not involved in the process from the beginning of the first phase of the sale.
- Believing that you can manage the sale on your own without the help of professionals. Unless you have a dedicated in-house M&A team, think very seriously about hiring advisors. You are not selling a flat.
- Not knowing if it is the right time to sell your company: is it the right time, is the market up, can your company grow, is the sector already concentrated…?
- Is your company in the best moment to be sold? Is the company sufficiently professionalised to be attractive? Are the financial statements in perfect order?
- Is there a written agreement between the partners for the sale?
- Do you know what you will do once you have sold the company?
Not having a good valuation of your company
- You cannot start the process of selling your company without knowing its value.
- The value of a company is not a simple multiple, there are many more details that can vary that value. Leave it in the hands of an expert.
- Differentiate between value and price.
Not having a clear strategy from the start
- Be clear about the reason for selling; changing your mind during the process will scare off potential buyers.
- Be clear about what percentage you want to sell, how long you are willing to stay in the company once it is sold, how you want to be paid the price, are you willing to accept deferred payments, …..
- Do you prefer a strategic or financial buyer?
- Build a communication strategy that allows for confidentiality to be maintained until the end of the sale process.
Losing the focus of the business
- A sale process can be long, 8-12 months, so don’t lose the short and long term focus of your company.
- Pursue your business strategy as if the sale does not have to happen.
Create competition among buyers
- Hire advisors who are able to introduce you to potential national and international buyers.