A Checklist for Bringing Top Value in Business Sale

If you are contemplating sale of a company, there are “tricks of the trade” that you could and should use to obtain top value. The following is a brief checklist of major deal enhancement techniques to consider as you go through the selling process:

1. Create competition:

The one way to ensure a sales price at a top competitive market rate is to invite competitive suitors to the negotiating table. Buyers have an obligation to their own shareholders. They can’t offer to pay you the premium for value, unless they MUST due to competitive pressure.

2. Do the homework:

Prospective buyers are not only the obvious head-to-head competitors. Think 360 degrees. Often the company in “adjacent” markets is actually the more eager prospect to buy. They get something NEW from you – something they don’t already have.

3. Guard confidentiality:

Is this a conflict with checklist item #1 above- to “create competition”? No, but it does require caution and methodically controlled process. Talk to multiple buyers, but only a few – and choose them carefully. Insist that any competitive suitors sign a non-disclosure agreement before you enter into meaningful discussions.

4. Hire professional help:

The best sales are always assisted by professional outsiders. It takes from 1,000 to 1,500 hours in total to sell a company. Hire a professional. The return to you will be far more than what you pay.

5. Resist the “stop-shop”:

Don’t commit to a buyer exclusivity agreement until you’re really agreed, in writing, on the fundamental details of the transaction. Also, remember– you are agreeing to exclusivity on the terms proposed. If the buyer changes those terms, you need to be free to reconsider alternatives.

These are only a handful of the items you will want to consider as you move forward to consider sale, but they can make a tremendous difference it terms of the results you get from the selling process.

Deborah L. Douglas is Managing Director of Douglas Group, a middle market investment banking firm, based in St. Louis, MO. For additional information contact 314.991.5150, or email ddouglas@douglasgroup.net.