In business, it’s easy to feel sentimental. You’ve built your company from the ground up, after all, and you likely have close ties not only to your products but also to the team who have helped them reach their audience. You may feel like you need to remain loyal, even when your heart has gone from this business pursuit.
In truth, though, if you’ve worked hard to build an entire company, it’s totally understandable if you want to cash in and put your feet up. Even if it isn’t what you originally had in mind, accepting an acquisition offer can be a fantastic way to secure a large lump sum that buys you an early retirement, or even opens you up to smart investment opportunities elsewhere.
All of that said, your emotional ties and literal hard work mean that you won’t want to accept a less-than-generous offer for your life’s work. That’s precisely why we’ve put together some top tips on how to get a great price for your company.
1 – Know Your Worth
Getting the best price for your company requires you to fully understand how much this thing that you’ve built is worth.
Viewing your last three year’s tax returns and profit and loss statements is the easiest way to do this. There are also a number of different ways to accurately value your business, which may include market-based valuations that consider the sales prices of similar companies, income-based valuations that consider the future earning potential of your company, and even asset-based approaches.
The best solution is typically a mixture of these, which will give you the most accurate possible idea of a reasonable asking price.
2 – Eliminate Your Legal Skeletons
Low offers are inevitable during an acquisition if legal issues like unpaid company debts and ongoing legal disputes surface. This is precisely how to get a great price for your company: work with business lawyers to clear any legal skeletons from your company’s closet.
It’s especially important to resolve outstanding disputes before putting your business up for sale. You’ll also want to get your legal documentation in order, and be sure to update or apply for any missing licenses or permits that could otherwise prove problematic.
This might seem like a lot of work, but with lawyers also able to help with the acquisition process itself, it’s a step that’s always worth taking.
3 – Find Room for Negotiation
If you accept the first acquisition offer on the table, you’ll inevitably end up with less money. Instead, how to get a great price for your company fundamentally involves a process of negotiation. Finding as much wiggle room as possible is always best for your finances.
Options like offering transition periods and staff crossovers can be effective here, as they save your buyer a lot of work post-sale. Equally, considering multiple offers can encourage more competitive negotiation tactics. Simply remember that you’re in control, and there’s plenty you can do to negotiate a better price!
Don’t consider selling a company without boosting your price prospects in these essential ways!
