Check these 7 tasks off for The Win
When selling your print business, cooler heads don’t just prevail: They successfully close the deal.
Too often, print business owners let their egos and emotions get in the way of rational decision-making. For one thing, the sellers think they control the process. This can lead to some serious mistakes.
Many deals fall apart because the seller isn’t fully prepared for the due diligence process. Too often, entrepreneurs adopt a DIY mindset. Then they are aghast when a deal-killing issue pops up during due diligence.
You can avoid these unpleasant surprises if you hire seasoned M&A coaches and qualified advisors with print-industry knowledge.
The 7 tasks below can help you prepare for the due diligence process.
1. Conduct due diligence on yourself.
Before you commit to selling your business, perform your own internal due diligence. If you are prepared for the questions that will be asked, you can avoid potential deal breakers. Better yet, you can be prepared to point out certain issues to buyers upfront. That will signal your integrity and transparency.
2. Consider the buyer’s reputation.
If a potential buyer has expressed growth strategies for the combinations of the businesses, why should you believe their intentions? How have they conducted similar acquisitions in the past? Do you like and trust the people you will be negotiating with?
3. Avoid litigation.
Are any potential lawsuits looming against your company? Any bankruptcy proceedings? A buyer will automatically see these as red flags and may be required to shut down negotiations.
4. Review your finances.
The buyer will want to review your financial statements, so be prepared to provide 3 to 5 years of financial statements. Gather reference letters from institutions that have done business with you.
5. Get an independent opinion of value.
This will help you be realistic in your offer expectations and understand the personal and business tax implications of a potential sale. If your company produces labels, packaging, or specialty graphics, the LaManna Consulting Group can help provide this critical knowledge.
6. Assess how well the potential buyer understands the industry.
Whether you will be dealing with a financial or strategic buyer, they will have already targeted your company for either a vertical or horizontal integration.
But perhaps they aren’t aware of some of the nuances of your specific niche. For example, if you specialize in pharmaceutical labels, does the buyer understand how heavily regulated the industry is? Does the buyer realize how important quality controls are for success? Most importantly, are they clear on the type of financial outlays and resources will be required to succeed?
7. Prepare for the post-sale transition.
The post-closing transition period is one of the most critical parts of an M&A transaction. Does your buyer have an experienced integration team in place? If they don’t have one internally, have they enlisted outside professionals to aid in the process?
After the deal closes, how will you break the news of the sale to your employees? How will you answer their questions about the transition?
This is not an all-inclusive to-do list as you gear up to sell your print business. It simply highlights some of the challenges that complicate deal-making.
Keep in mind that selling your business will always involve expenses for professional services. These are usually paid at the closing of the transaction. Choosing well-qualified experts before the sale process even begins can help maximize the value of your business and prepare you for the buyer’s due diligence process.
The truth is that you only get one shot to do a deal the right way. Once your first deal breaks down, potential future buyers will always ask about the reasons for a lost deal.
For more advice on preparing your business for sale, download our free guide “Code Red: 12 Seller Mistakes” It outlines some of the preventable mistakes you can avoid when you know what to expect from an M&A process.