DID YOU RECEIVE UNSOLICITED INTEREST IN BUYING YOUR BUSINESS?

Nine things to consider if you received unsolicited interest

Understand the outreach you are receiving: It's important to understand who is interested in your business and their motivations for wanting to acquire it. This will help you gauge whether the offer is fair and whether you want to engage in further discussions.
Know what investors are looking for: Investors will typically look at factors such as the financial health and potential of your business, the strength of your management team, and the potential for growth. Understanding these factors will help you better position your business and negotiate a fair price.
Understand how your company is valued: There are various methods for valuating a business, such as the discounted cash flow method or the comparable company method. Knowing how your company is likely to be valued will help you understand whether the offer you are receiving is fair.
Maximize the value of your company: Before entering into any discussions with potential buyers, consider ways you can improve the value of your company. This could include improving financial performance, strengthening your management team, or diversifying your product or service offering.
Enter into a transaction with a sole buyer cautiously: A "proprietary deal" is when a specific buyer is given the first chance to purchase a company before it is marketed to other buyers. While this can be tempting, it's important to be cautious and consider whether this is the best approach for you.
Know who the purchaser is: It's important to understand who is interested in acquiring your business, whether it's a financial or strategic investor. This will help you gauge their motivations and determine whether you want to engage in further discussions.
Control the process: When you are the party being approached, it's important to exert control over the process. This may involve seeking the advice of M&A advisors, signing a non-disclosure agreement, and negotiating a fair price.
Consider the terms of the deal: In addition to the price, there are other important terms to consider in any acquisition deal, such as the structure of the deal (e.g. cash, stock, or a combination), any contingencies, and any ongoing obligations or liabilities.
Seek professional advice: If you are not familiar with the M&A process, it's important to seek the advice of professionals who have experience in this area. This could include accounting, legal, and deal advisors who can help you navigate the process and negotiate the best possible terms.

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ABOUT THE SHAUGHNESSY GROUP

The Shaughnessy Group was founded in 2017 with the goal of assisting business owners in successfully selling or divesting their lower middle-market, privately held companies. Since its establishment, the company has expanded its services to also include helping clients grow through acquisitions and securing debt funding for those acquisitions. The Shaughnessy Group aims to provide expert guidance and support to business owners as they navigate the complexities of selling or acquiring a business. Visit www.shaughnessy.group to learn more.

ABOUT THE AUTHOR

Karl Sigerist is a business advisor who helps shareholders, board members, owners, entrepreneurs, and executives navigate issues related to governance, strategic planning, and corporate finance throughout the life cycle of their business. He has experience in starting up eight organizations in the public and private sectors, as well as leading three turnarounds of Canadian and European private and public organizations. Karl has successfully led the growth of several business-to-business technology, specialty finance, warranty, and creditor insurance companies through mergers, acquisitions, strategic alliances, and capital raises, resulting in the development of leading national brands and platforms. He has also fostered cultures and teams that have achieved Growth 500 status for five consecutive years and been recognized as a Top 100 Small & Medium Enterprise Employer for two consecutive years. In addition to his professional work, Karl serves as a mentor to business school students and newly immigrated Canadians, and volunteers on not-for-profit boards. You can find out more about Karl on his LinkedIn profile at https://www.linkedin.com/in/karlsigeristjr/.

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