What You Should Think About When Selling a Technology Company
When most business owners and entrepreneurs found technology companies, it is the far-off objective to sell their businesses or go public. Unfortunately, when the time comes to consider selling their businesses, many founders still do not understand the many emotional, strategic, and tactical challenges in the process with which they will need to grapple. If you are interested in selling your tech company, you need first to understand that this transaction may be the largest one you have ever handled — and you need to do it right the first time, because there might not be another chance!
Fortunately, we at Ashley Capital Group are an M&A company experienced in business sales and have a list of equity companies and other reliable contacts ready to take on a technology company sale like yours! But, if you reach out to us and ask us, “How can I sell my business?” you should at least know the basics of an acquisition arrangement.
Technology Company Sale Considerations
In any business sale, five parts must be handled carefully and thoroughly:
At this initial stage, it is essential to determine your goals and stay focused on them. Once the goals are clearly defined, you can move on to researching potential buyers, finding the best contacts, and doing some preliminary outreach. It is also crucial to choose a successful M&A partner like Ashley Capital Group to help you through this part, as well as the rest of the transaction. Finally, lawyer up — technology is an ever-growing field, and your company’s assets, equity, and reputation in the industry need protection.
This stage provides you with the opportunity to begin a dialogue with potential buyers. Finalize your deck of target companies with your M&A partner. Then, draft up outreach messages that generate interest in the sale and send them out.
Once you have generated sufficient interest in the sale of your business, it is time to tread carefully. Think of this stage as the dating phase — you want to show interest and communicate the best parts of the company without looking desperate, even if you are. This is where you should set up calls and meetings with the CEOs of interested target companies and let them get to know you. Also, never bring up prices unless they do. If they do come up, start at a moderate amount. Everything you have done and will do has value, and you don’t want to enter conversations and negotiations well below your goal.
- Negotiation & Due Diligence
Here, you will discuss everything, including price, payment plan or cash-at-closing, employee retention, assets, equity, taxes, etc. There may be an extensive negotiation and a term sheet to review, and the company may hire a third-party legal rep to perform a high-level review. It is best to speak with your lawyer and your M&A partner and let them take over.
This stage may well be the most sensitive and stressful part of the process. If one thing goes wrong, it could throw off the entire purchase. Below are a few mistakes you should avoid at this time in your tech company sale:
At this point, it is vital to stay strong, negotiate the purchase agreement, and seal the deal!
If you are looking to find buyers for your technology company or you want to learn how to sell your business to a competitor, contact the mergers and acquisitions specialists at Ashley Capital Group today!