As a business owner, you understand that mergers & acquisitions are challenging and stressful in the best of circumstances. They can be disruptive to your company’s workflow and may impact worker motivation, loyalty and retention. However, you can take steps to ease the process. Consider these tips to help you prepare for your potential sale.
Analyze and Prepare Your Paperwork
Often, business owners who hope to sell their companies have incomplete files. For example, they may be missing contracts, corporate meeting minutes and even stock options data. However, buyers need this information to analyze the company properly. Your company should compile important paperwork and set it up in a specific data room within the company.
You should also consider creating a disclosure schedule. This schedule will include key contracts, individuals who have stock options or equity in the company, any legal actions by or against the organization, any warranties you have and all intellectual property documentation. In addition, you need to identify any contracts or leases that require consent concerning organizational changes, and you should pursue these consents early in the process. Don’t forget to prepare your company projections and support them with evidence.
Your first task after you have decided to sell your company is to consult with your legal team. Your lawyers should be well versed in the process, but if they are not, a full-time mergers and acquisitions lawyer is your best choice. You need legal counsel who understands every aspect of the sales process and who will negotiate strongly on your behalf. These professionals will also help you understand contracts and any filings you need to submit.
Hire Investment Bankers
If you are thinking about selling your company, your first task should be speaking with investment bankers. These individuals can guide you through the process, including discussing market comparables with you. They can also help you find potential investors or buyers. During the negotiation and sale, they will act as intermediaries.
You need to do your due diligence with the investment bankers you choose, however. For example, they should provide you with a list of potential buyers, but they need to disclose their relationships with these companies as well. Also, check their client references. Don’t be afraid to negotiate on the engagement letter’s terms.
Identify Possible Employee Issues
Selling a company has a significant impact on its employees. Therefore, you need to know whether the buyer intends to retain your employees and why. You should also ask how the buyer intends to motivate your employees. If you offered stock options to your staff, you should discuss how the buying prospect intends to handle these options.
The mergers & acquisitions process is time-consuming. Learn about all the ways you can protect yourself, your company and your employees during the progression of the sale.