Last year while I was at a Global YPO event, I met THE go-to guy that YPO members use to help them sell their companies.
Over the year I started to learn a little more about why & when to sell…
Why Owners Sell Their Company
The Owner May Be Looking For:
- More time
- More liquidity
- Diversification of risk
- More stimulating (i.e. international?) work environment
- Access to ‘C’ suite
- More capital (i.e. lead industry roll-up)
- Technology/Intellectual Property (IP) to gain efficiencies
- Pure old fashioned boredom
When owners start answering yes to these, then selling or mergers may be an option to consider.
Sometimes it’s even clearer and they KNOW it is time to sell
- A compelling event/reason to sell that has occurred?
- Could be a succession issue
- One of the “five D’s”:
o Disenchantment/deciding to do more with their life
How to Get the Business Ready For Sale Strategically?
- Identify strategic investors and understand how they could value the business to their shareholders at a level much higher than you value your business at
- Get your vision clarified for what a strategic transaction would mean to all shareholders
- Required vs. preferred outcomes identified (i.e. What do you NEED, and what would you LIKE) in order to sell
Why This Is A Good Economy to Sell the Company?
- Cash and corporate reserves are at the highest they have been at in the history of the world
- Private Equity firms, that have identified expertise areas/that can be strategic, are coming to a point where they need to deploy their funds, or return them (use it or lose it)
- As the world gets smaller, more international buyers emerge; leverage the international environment and how your products, intellectual property (IP), geographic location, cost advantages, technology, management skill sets bring value to international buyers
- And my opinion (and I’m an optimist) but I see a double dip coming soon, which means values drop fast…
What are you thinking of doing with your business?