Every successful entrepreneur looks for a liquidity event which in most circumstances is exemplified by selling your business. To be successful in selling your business, entrepreneurs need to understand how to best define the values of the organization, who potential acquirers could be, and how to package the business for a successful exit. Unfortunately, entrepreneurs rarely understand the intricacies of the sales process and thus leave a lot of money on the table when exiting.
3 Keys to Selling your Business
Sometimes an outside firm like HafeziCapital can see the value proposition from a different perspective than those within the organization. Our job is to understand the full value of the organization based on internal and external research of your firm and the market. We analyzing key trends and market movements and find strategic buyers who may be willing to pay a premium for the organization.
Structuring the Sale
Structuring the value proposition for the exiting company is critical for a successful exit. The art of M&A’s is to understand what the market will value and how it will value it. The structuring process may include a deep dive into the organizations finances, management, customers, supply chain, and marker segments. This analysis allows HafeziCapital to internalize the findings and minimize organizational risks while increasing corporate valuations. HafeziCapital’s model focuses on the values to the entrepreneur and restructuring the operation to make it financially attractive to strategic buyers. An efficient structure is key in preparing your business for the selling process.
Valuation and Price
Every entrepreneur has a price in mind, however many times that price is not realistic. The market dictates price, and entrepreneurs get a reality check when the price they want is not the price that the market is willing to pay. Valuations are based on market comparable(s), EBITA multiples, value per user, asset valuation, projected future cash flows, and/or a combination of all the above. Every acquisition is based on a financial business model that leads to a valuation. Defending the asking price is critical, given that it enhances credibility and decreases the chance low-ball offers. This valuation process allows both parties to be confident with the eventual offer and sale of the business.
Once we structure the company and set a sales price, targeting the correct buyers becomes a critical component of an effective sales process. Targeting allows us to understand what market segments are interested in the sales process and which market segments could be strategic buyers. Targeting is an art and it’s not only based on an effective network, but also on how you engage the potential buyer. HafeziCapital’s one-to-one meetings allows for effective communication of the value proposition and an understanding of how the company can increase its own value post-acquisition. We focus on value creation as a means to deliver the sales process and thus can decipher quickly who the best buyer. Understanding your target buyer is essential in a profitable business transaction.
Selling your business successfully
Selling your business successfully requires a keen understanding of your business and the sale process. It not only involves a financial transaction but the intangibles of nurturing the sale, due diligence, and transparency between parties. A company like HafeziCapital can help increase your valuation and help you make the best financial choices. HafeziCapital does not view the M&A process as purely transactional, but rather a relationship based on trust and ongoing growth between all parties. We are more than just a Consulting Firm and Investment Bank, we are a member of your team. With a relationship based on mutual trust, we will provide you with the most accurate and strategically sound advice possible. HafeziCapital represents clients with gross earnings of $500,000 to $50m in the areas of technology, government contracting, medical, consumer goods, legal, retail and telecommunication. Let HafeziCapital help you reach maximum value for your next exit.