April 11, 2013

Find your ideal exit strategy for a smooth M&A process

What if you build a successful tech company from the ground up, and then decide that it's time to move on? How do you know which direction to go in to ensure that you agree to a competitive selling price but don't sacrifice your company's bottom line in the process?

"Selling a company is different than selling a piece of real estate," explained a contribution piece in Crain's Cleveland Business. "If for some reason the sale doesn't take place (an unsatisfactory offer price, etc.), the CEO doesn't want employees, customers or shareholders to get rattled."

According to Crain's, when an entrepreneur is looking to sell a business, it's important to decide if he or she is considering one buyer or several. Each has its advantages, which is why it is necessary to receive guidance from lawyers and investment banking firms.

For example, let's return to the previous scenario and say that you have a very attractive tech company and the market conditions are favorable. An advantage to focusing on one buyer is confidentiality – word is less likely to get out that a potential sale could be taking place. Additionally, you could have a better chance of establishing a continuing role in the organization.

On the other hand, let's say that you are not concerned about confidentiality and want to expand the market for potential buyers. This could also be a good idea if you are not sure exactly which direction you want to go in with the company – whether you want to stay involved or if you want to sell all or part of the business. 

Regardless of the reasoning, it is important for any entrepreneur looking to sell to perfect his or her exit strategy. Different companies are run by different leaders, which is why it is beneficial to work with a technology M&A advisor to fine-tune the end goals.