Who to Involve When Selling Your Company
Selling a business can be a stressful experience for any entrepreneur. From choosing to whom to sell, to pulling together all the diligence material and to negotiating the terms of the sale, it is a daunting process.
At Volaris, we have been acquiring and operating software companies focused on serving vertical markets since 1995. And while each acquisition is unique, in our experience the smoothest process and quickest closings have one common identifier: a team of domain experts assembled and ready to help with the sale.
Not having a team of advisors dedicated to selling the business does not only delay the closing, but can also derail the process causing frustrated buyers and sellers to walk away.
In our experience, these are the key roles that a seller will need to fill:
1. Internal M&A Resource
During the selling process, the potential acquirer will need to collect and analyze data about your company. Finding the right people from your organization to help collate this information can be difficult as it will require a chunk of their time and they will be privy to confidential data.
The most common situation that we encounter at Volaris is one where the founder or largest shareholder is the driving force behind the sale. However, in situations where the founder (or CEO) wishes to assign a member of their team to drive the M&A process, it is critical to assign this role to a senior and trusted member of the organization, such as the CFO or COO.
2. Legal counsel
When looking for legal counsel to help you think through the M&A process, it is critical to work with a lawyer or law firm that is experienced in dealing with selling businesses in your specific industry. The lawyer should possess in-depth industry knowledge, as executing an M&A transaction in the world of manufacturing is very different from a software M&A transaction.
3. Accountant and Tax Specialist
One of the most important people on your team will be your accountant. The accountant will play a crucial role during the diligence process, particularly in situations where you have chosen not to engage a business broker. Your accountant will act as a trusted advisor and will help you navigate the financial aspects of due diligence.
Moreover, the tax implications of selling a business are often an overlooked area. Engaging an accountant to structure the transaction in the most tax efficient manner can create additional value for the seller.
4. Business broker
Whether you should involve a broker to act on your behalf is entirely dependent on your preference and expectations. Their role is to help manage the flow of information which allows you and your team to continue managing the day-to-day operations of your business.
The advantage of using a broker is that they are able to broaden the number of potential buyers, or work closely with a purchaser that you have identified. The disadvantage, of course, is that they will take a commission for the transaction and therefore, may not have your best interest in mind.
All-in-all, having the right people supporting the sale will make a difference between a difficult process and a smooth sale - or no sale. Just like running a business, dependable and hard-working individuals will help shareholders achieve the outcome they desire when selling their business.