How To Maximize Selling Your Startup

Last Updated: November 24, 2021

Geoffrey

Geoffrey

Selling a business is much different to selling just about anything else. In contrast to selling your old car, a bar of gold, publicly traded stocks, or your furniture, there is a lot that you can do to influence the value of your business, and how much you can gain in an exit. 
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Selling a business is much different to selling just about anything else. In contrast to selling your old car, a bar of gold, publicly traded stocks, or your furniture, there is a lot that you can do to influence the value of your business, and how much you can gain in an exit. 

You are only going to sell this company once. While you don’t want to be greedy and miss out on the timing and opportunity, you shouldn’t sell yourself short without trying either. 

Here are some of the ways that you can work to maximize your exit.

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How You Sell It

Don’t underestimate the fact that how much you get for your business and on what terms is largely about how you sell it. 

Of course, you want to develop the tangible value and hard metrics that buyers are looking for. Though how you position it, and the sales skills you deploy will make all the difference and can add many zeros. Not to mention the power to dictate the terms you crave the most. 

Not unlike fundraising, this includes your pitch book, PR, supporting materials, and your verbal delivery. 

Choosing The Right Target Buyers

You will waste a lot of time, energy and money engaging with the wrong buyers and brokers. You may even end up giving away critical information and advantages to others. 

Targeting the right buyers will not only maximize the future of your company, product and mission, while guarding your values, but will also yield a more profitable sale. Not to mention a far more enjoyable process. 

Give deep thought to who the right buyers are before engaging in any conversations around this. 

M&A Deals Of Your Own

Many businesses have found that conducting mergers and acquisitions of their own in advance have gone a long way to adding value and making their companies far more attractive and valuable to buyers. 

What metrics, assets, and market positioning can you own to maximize the value and magnetism of your business?

De-Risking Your Business

The biggest hurdle to selling your business and getting the number and terms you want out of a deal is the risk perceived by potential buyers. 

Everything you can do to remove these perceived risks can help smooth the way and add value. There may be specific items for different buyers. Though, one of the most significant will be integration. 

Consider how you can prove your companies are a good match for each other in advance, and you will break down these barriers.

Get Pro Help

Get professional help in positioning your business, negotiating the best deal and making the best connections. 

Investment bankers, business brokers and M&A advisors can help you hack the market with their contacts, use their knowledge to prep and sell your business, and know how to negotiate at this level. 

Creating A Smooth Process

Striking an initial deal and securing a LOI is just the first step in selling your business. 

All the real work, risk and factors that determine the ultimate outcome really just begin at this point. This can either be the toughest thing you will ever go through, and may end in disaster, or a swift and exciting time. 

Here are some of the ways that you can sail through the process faster and with less stress and risk. 

Find A Good Buyer Match

Who will your company be in the best hands with? Who shares your values, vision and really has the resources to maximize its potential? 

Who has the experience to close the deal, and has a reputation for treating buyers will in the process and afterwards?

Who has the money to buy your company? 

Who has proven to be exceptionally skilled at integrations so that it will continue to work out, your team will have a good home, and you’ll get those earnouts?

Don’t Oversell It

While you absolutely want to maximize the perceived value of your business and sell an optimistic forecast, overselling it can catch up with you in the due diligence phase. 

If your buyer finds out that you’ve misrepresented your data and assets don’t expect the original offer to stick.

Have Your Team On Board

While you may have to carefully throttle information to your team and others during this process you need them on your side and aligned with the process.

If not, they are not going to be focused on the right tasks and metrics. They are going to say the wrong things. Fear may get the best of them and result in them derailing the deal or costing you money. 

Accounting

Be sure that your accounting and books are already organized, polished, using acceptable accounting and tax principles and are flawless. 

This is probably also a great time to revisit your budgets and expenses, to optimize them to be more attractive to buyers. 

Legal

The buyer of your business is going to want to go through absolutely every legal document you have and should have. 

Don’t sabotage your deal and terms by not being ready. Have them compiled, organized, and corrected if needed.

This may include your articles of incorporation, insurance policies, vendor and customer contracts, leases and loan documents, employee agreements, stock options and RSUs, and more. 

Have The Time & Budget For It

Anticipate that selling your business is going to require time and money. If you are not prepared for this you may not make it through. 

From lawyers to advisors, marketing pros and a dedicated team to run this process you are going to need a labor budget. 

This is an incredibly time consuming process that will eat up a lot of hours. Those need to be freed up to run this through to the finish line. 

Despite the disruptions and additional expenses you will need a budget and people to be pushing your performance even harder, so that your business is more attractive during the process, not less. 

Summary

Check out these tips for selling your business. There is a lot you can do to nail the timing, maximize the outcome and smooth out the process. Take control of it, and the results will be a lot better. 

Written by Geoffrey