Receiving an unsolicited offer to buy your business can be both flattering and validating. However, after years of dedication and hard work to build your business, how do you decide whether this is the time to exit?
Here are some of the first questions you should consider:
If you decide to sell, these are
the typical next steps:
Due diligence
This is where the buyer takes a deep dive into your business to make sure they understand what they are buying from a financial, operational, and reputational perspective. At the same time, you’ll take the opportunity to do some diligence on the buyer. The process typically takes anywhere from three four months, or longer depending on the parties involved, quality of information, and the findings.
Negotiation
This can be an emotional process if you and the buyer place different value on each business components (e.g. your employees or the client relationships you’ve fostered). Remember: it’s not personal. They’re trying to pay as little as possible and you’re trying to earn as much as possible. Beyond the price, there can be an incredible number of pieces to negotiate. It’s important to focus on the bigger picture, and not get hung up on smaller issues.
Legal documentation
Many business owners are surprised by the amount of legal documentation that underlies a typical business purchase and sale. Retaining a lawyer with transaction experience is key to help navigate the process.
How to stay prepared for an unsolicited offer
Unsolicited offers are unpredictable, so always being prepared is the best strategy.
And the advice is pretty straightforward:
- Maintain good standing with CRA
- Build a team that could potentially replace you
- Stay on top of any environmental issues in your facility
- Understand valuation metrics for your industry
- Know your numbers in case someone asks
A BDO advisor can help you with all of this. And when the offer comes in, they can help you with all that too.
Check back for content updates, so you can be even more prepared to entertain (or make) unsolicited offers.