Developing a business can take years, but creating a profitable company isn’t an easy task. After the business takes off and starts to bring in constant, stable profit, it is a prime subject to be sold off for a big price. And even if the company is not profitable, but there is some buyer that wants to invest in it, selling it off might be considered a wise business move.
But how does one prepare his company to be sold off, what are the steps they should take, and how can a data room M&A help?
Contents
Can the business operate without your supervision?
Before handing off all of your business documents into new hands, you need to ask yourself a couple of questions. One of the first issues that might arise is “Will the business be able to function without me at the top?”
Answering this question will start a long, but important process in finding out what kinds of tasks you need to learn to delegate, what kinds of documents you need to prepare, and if there is anything case-specific, you would also need to put that into writing.
Using M&A data room providers to share those documents is considered a good practice. Only this way will the next boss know how to operate the business you have sold to them. Follow the checklist below to make sure you handle the transition responsibly.
Financial statements
How is the financial standing of the company? Does it have any debt, what is the state of assets, and how many products are there available to be immediately sold? Is there a problem with the supply chain, or are there any cash flow problems within the company? How much money goes to the employees, and what is the profit margin on the product itself?
Those are all valid questions that need to be answered before the company can be given to a new owner. It will undoubtedly speed up the data room due diligence process.
Products
What are the things that make your company profitable? What kinds of products do you sell, or what kinds of services do you provide? A complete specification of the assets that provide your company with income is necessary if the new business owner wants to understand the underlying principle behind your business.
They need to know how you were handling the profit, and which things made the most difference, financial and development wise. A data room software for those operations is recommended.
Development plans
What will the future of the company look like? What kinds of expansion were in the development plans? Those files might also be crucial if the new business owner wants to continue working under your model.
Even if they would like to change something integral to the company, the plans for the future could be used as a guiding principle in the alterations the new owner wants to make. Access to online data room software could also be crucial. Those plans might also tie in with the expansion plans of the company that acquired your business.
Current capacities of the company
Knowing how many people currently work for your company, and what are their overall capacities is another factor worth putting in writing. Looking through the documentation, and creating a report might be a lot easier inside of a virtual data room, where all the files are in an accessible and secure space. The tools can help you find the exact files you are looking for and manage the new ones that will be created while working with the software solution.
Financial obligations
What kinds of fees are affecting the cash flow each month? What are the ongoing expenses? Are you paying for a lot of virtual data rooms? All of those also need to be addressed before anyone new can take over. If they are going to notice unaccounted for transactions from the business account, they will need to know where the money goes, and what kind of contracts are in place.
Some suppliers might have long-term contracts with your company, you might be working with freelancers, so everything needs to be put into writing and given to the person that will be responsible for the company in the future.
Members of the board
The board of directors of your company is responsible for the major decisions that occur during the company’s lifespan. As you will give the reins of the company to someone else, you should give them a heads up of who is on the board, and whether they will want to still work with them in the same kind of capacity.
Are they using any tools like a board portal or an electronic data room? Even if they want to exchange the board completely, knowing who did what will help in the transfer of tasks, and responsibilities.
What will be the next step?
After each step is completed, there is only hope for the future left. What will the future of your company look like after it is incorporated into another company? How will the new boss change things? Or maybe they will let you still have your position, but you will act in a different capacity after the company is taken over? All of those are valid points that also need to be answered before you agree to that M&A deal in an M&A virtual data room.
Conclusion
Selling your business is an important step. Spending a lot of time building up an empire to later sell it to someone else is a tactic that has been employed by many marketers worldwide.
Each such process is a little different, but by following the above-mentioned steps, you should have a much easier time completing the takeover. Using data room services might also provide you with additional help in that strenuous time. But after the whole process is done, you will be able to enjoy the outcome of the deal.
