Mergers and Acquisitions — Selling Your Small Business

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Your fiercest competitor has just submitted a letter of intent to acquire your business. How do you respond? Is the offer a good one? Is it the right time to sell? What are customary terms and deal processes? If you’re like approximately 90 percent of business owners out there, you’ve never been involved with the sale of a business (particularly your own). You would likely have a host of questions similar to these.

Business sale or sell-side mergers and acquisitions (M&A) transactions are “unique beasts,” and the stakes are too high to go it alone or enter the fray without the proper advisors.

If you’re prudent and well prepared for a sale, you can avoid the mistakes that befall many an unsuspecting seller. These can include an outsized strain on your day-to-day operations, suboptimal deal terms and value (i.e., lower sales price and unattractive terms), and an inefficient deal process. Remember that it is critical to communicate — whether orally, in writing, or through the sharing of company information — with intention and that “time kills deals.”

Hiring a Fractional Leader Can Optimize Your Business for Sale

Working with experienced fractional leadership (CMO, CSO, COO, etc.) months or years ahead of a prospective transaction — whether vaguely conceptual or immediately actionable — can supplement your core team. Domain experts can supercharge your operations and optimize the value and attractiveness of your business.

Additionally, a Fractional CFO experienced in M&A can provide transaction-related guidance alongside ongoing strategic financial oversight. When the time comes to “go to market” (proactively pursue a sales process) or respond to the unsolicited acquisition offer, you’ll have experienced advisors on hand. And you will be prepared with financial results and operating data tailored to your audience of third-party investors and acquirers.

Regardless of whether a transaction is ultimately pursued or consummated, by going through the process, you’ll likely have received outsized value in the form of a more sustainably profitable and well-run business.

About the Author

Landon Mizuguchi has over 15 years of experience encompassing M&A, general management, corporate finance, and valuation, with preeminent professional services firms such as Goldman, Sachs & Co. and EY (formerly Ernst & Young). As principal of Malama Capital Advisory, he provides Fractional CFO and M&A advisory services to West Coast-based SMBs and hyper-growth startups. Contact Landon here.

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