5-Min Read
August 2023
Signs You Are Ready to Sell Your Company
If you’re unsure if you are ready to enter into a sell-side process, try asking yourself the following questions. If you can answer them with relative ease, it might signal to you that you are ready to explore your options relative to an exit strategy.
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Insight Details
WHY do you want to sell?
Selling your company is a big decision – one you’ve likely thought about off-and-on for a long time. After all, you’ve worked hard to build your business. Aside from the financial implications of an exit, emotions play a big part as well. How could emotions not be a part of the idea? It could understandably be hard to let go of the business that has become part of who you are, one you’ve likely dedicated 10-plus years building.
If you’re unsure if you are ready to sell your company, try asking yourself the following questions. If you can answer them with relative ease, it might signal to you that you are ready to explore your options relative to an exit strategy.
This is the most important question – and it is likely any prospective advisor and ultimate buyer will ask. Your motivation for selling a portion, majority or all of your business would bring into focus the options your M&A advisor can present to you. There is no wrong answer, but knowing what you’d like to do after a sale transaction is important.
Taking time to think about this could be helpful. Do you picture yourself buying back more time to coach your son’s baseball team? Sail to the Bahamas? Alternatively, do you want to keep a portion of the business, stay on and help it grow so you can exit again – often referred to “taking a second bite of the apple”?
Nailing down what you want to do in your next chapter is the first step in readying yourself to sell your company.
WHEN do you want to sell?
You may be ready to sail into the sunset but is the business ready to move on? Has your business been growing? How are your margins, excluding net owner benefits? Can you confidently stand by your financial statements? How would your team think about the future under new ownership? Is your business differentiated? These are some of the considerations an acquirer will reason through as it determines whether to proceed to acquire your business. If you can confidently speak to these considerations, you may be ready to take the next step.
WHO do you want to sell to?
Who you sell your company to may have to do with your motivations. Othon Herrera, Encore AMC Managing Director, goes a little more in depth relative to the types of buyers that could potentially express interest in your business here. If you want to fully exit your business, a strategic buyer may be the best option. If you want to stay on and get a second bite of the apple, a financial buyer, such as a private equity group, may be more appropriate. If your role as a founder or CEO is integral to the near or intermediate future of your business, that can help inform you as it relates to your options.
If you are considering taking the next steps and investing the time to ready your business for a sale, knowing the answer to these considerations can give you a leg up in the process. As a founder or owner, you owe it to yourself and the business to take the time to think about your readiness.
If you would like to explore the possibilities, feel free to reach out to EAMC for an initial conversation. We can serve as a sounding board and share our perspectives relative to a potential sale of your business.
Othon "O" Herrera
Othon ‘O’ Herrera has established a consistent record of strong returns over multiple business cycles at the C-level, across a range of industries for companies with up to $625 million in revenue, including navigating complex situations such as those requiring performance improvement, M&A, international expansion, turnaround, and transformation.
He has led M&A as a private equity backed consolidator leading to value creating exits for investors and shareholders. He founded Encore AMC taking the best investment banking practices from M&A firms he has hired throughout his career.
At Encore, Othon chairs the firm’s deal committee, while maintaining a direct presence on all the firm’s deal teams and transactions.
