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Get mentally prepared.
Get on top of your financials.
At some point during the process and often during the first call you will be asked about your historical financials and key performance indicators (KPIs). There are two important reasons to have a good handle on your financials. Firstly, your operating profit or Seller Discretionary Earnings (SDE) will often set the baseline for any price negotiations and give you certainty on the offers that you receive. Secondly, any business experiences – great, good, or bad months- by understanding the underlying trends and walking the acquirer through these, you will reassure them and not detract from a potential offer.
Prepare your business for scalability.
Are there any areas that are not fully automated? Do you operate a local warehouse and sometimes move goods yourself? Particularly if you are speaking to a larger buyer, think about how a potential acquirer could automate the business and present options to transfer functions to the supplier or a 3PL. An acquirer can help you work through the options, but no one knows the business like you and what will be required in the early phases of an acquisition.
Work on your pitch.
What is the unique selling point of the brand? Why have you been successful and what will allow the brand to continue to be successful? What are the growth opportunities? And what are the five products you are planning to launch over the next twelve months? Most acquirers will want to grow your business and take it to the next level. Present the potential of the brand and the growth opportunities to allow you to receive the best offer possible.
Prepare your question list.
As an acquirer we expect questions, so don’t be afraid to ask them. Firstly, you want to qualify the buyer to ensure that they will be good stewards of your brand. Do they have a strong understanding of your category and can demonstrate their ability to scale your brand and hit your earn-out targets? Though you are looking to sell the business for the best price possible, it’s a long-term partnership which often involves some performance-based payment and support throughout the first few months, particularly on the migration. Think about working with a professional partner that you have a high comfort in and who can execute the transaction and manage the business post-migration.