Want to sell your company for millions or even a billion dollars? Are you wondering about the things you must do to get your company acquired during an M&A process? Make sure you are on top of these ten things to make it happen.
Having worked with countless entrepreneurs, investors, interviewing the most successful founders with great exits on the DealMakers Podcast, and launching and selling my own businesses, I’ve found these ten things are the musts if you want to get your company acquired.
1) Prove Your Model
Even if you’ve bootstrapped so far an haven’t had to hit typical milestones for raising VC money, you’ll need to have something of value to show.
That may just be the best talent or best-loved brand in your space. Though acquirers are generally looking for a proven business model. Even better if that is one which is already profitable.
Expect profitability to be even more important if there are any recessionary periods in the economy and things tighten up.
2) Network & Build Relationships
Just as with fundraising with investors, acquisitions typically take time. That may be a little shorter if Google is already banging on your door, making offers. Though for most startups there is going to be a substantial dating period, even if another party is already really interested in an M&A transaction. That may last months or even years.
The earlier you begin building these relationships and connections the better. It should begin years before you plan or hope to be able to sell as an exit option.
Of all the founders I’ve met and interviewed, only very few have really nailed it when it comes to positioning their business for a specific acquirer, and essentially forcing their hand. Josh Hix for example built the relationship with potential acquirers for several years before he sold his business for
Often, it turns out that your acquirer can be a far different party than anticipated. Oftentimes I’ve seen acquisitions come out of founders building relationships with the executives of their competition. They’ve maintained those connections over time, and it just happens. So, don’t exclude anyone from these efforts.
3) Have Your Paperwork Right & Story Ready
Small businesses can be really unorganized. That’s what generally keeps the majority as just small businesses versus high growth startups that can achieve great exits. A good idea is to keep all the documents structured by folders in a service like Dropbox.
It’s a lot harder and more expensive to try and catch up and correct things later too. You’re also going to be dealing with very savvy and process-oriented partners in an acquisition. They’ll instantly spot big red flags in your accounting, etc.
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