How to protect your company's value when selling

The balance of power is key when selling your business. If your company is attractive and you have several potential buyers, then you have the leverage to reach an agreement on terms with one of the parties.

But if the balance of power has changed in favor of the buyer, then the process of selling a business can drag on for many months. You will likely be locked into a period of exclusivity that will prevent you from negotiating with other interested parties. However, you also want to be sure that when the deal does happen, the reputation and viability of your business will remain at the same high level as before.

Protecting your business during the sale process can be challenging. A few key points of preliminary preparation can ensure that the transaction will not be diluted by the buyer's requirements and will remain normal throughout the entire period of negotiations and due diligence.

Before you begin the sales process, you should review all of your clients' contracts. The best option would be to enter into new standard contracts. They must specifically state that the terms and obligations of the transaction remain in force upon a change of owner.

Both during the exclusivity period and after it, in the next step, you must ensure that customer service is not compromised in any way. Many medium and large companies are temporarily restructuring senior management so that the sales process is handled by an entirely separate team.

At the same time, keep all senior managers informed about what is happening from the very beginning. Have a meeting beforehand to make sure they are all on the same page about the company's strategy and policies.

«Interview in isolation» — a normal part of due diligence where buyers interview company management alone or in small groups. Disagreements within the ranks or blurred boundaries can turn off the buyer. Establishing a level and favorable working environment among senior staff can only enhance your company's reputation. It is better to start this process from the moment you first think about selling your business.

Happy and cooperative staff will also help speed up the due diligence process and win the buyer's favor.

Another factor that needs to be examined before entering into an agreement on terms — This is customer motivation. Why do your satisfied clients choose to work with you rather than your competitors? If you ask them, they will most likely be willing to put their reasons on paper, in documents that can be used in closing the sale or any other future transaction.

Due diligence of your company should not begin until the price and terms are agreed upon. However, when this happens, the buyer and his advisors will want to spend some time on your property reviewing the original documentation. If she — and all your financial indicators — will be in perfect order, this will strengthen your position and speed up the current process. When a division is sold, have separate management accounts available. If you ensure that your books have been audited by a reputable and accredited auditor, the buyer's confidence will increase and the transaction will have a greater chance of success.

Selling a business for a good price that is acceptable to you is a rather complex and time-consuming process. However, before making such a sale, it is necessary to conduct a thorough analysis and assess all the risks and opportunities, and this work should be entrusted to the appropriate specialists. One of these professional teams operating on the international market — this is Russian-Eurasian Business Broker (REAB).