Sell your business with confidence.
It’s too large an undertaking to do it alone. At stake is the largest store of your net worth, and likely the one you care about the most. No one performs heart surgery on themselves; they go to a cardiac surgeon. Same with your business.
The best way to sell is to stay focused on running your business (and growing its value) while letting professionals run the sale.
But first – before you start – take a step back and ask yourself why you really want to sell. Have you or your company plateaued? Are you losing marketshare? Or are you simply looking to cash out and ease into retirement? An honest answer will help inform the process.
Next, ask yourself why potential buyers would want to buy your business. Determine the key value drivers and make sure you can substantiate them. Then take a deep breath and prepare for the most emotional and time-consuming chapter in your life. It won’t be easy. But there are a number of steps you can undertake to make it easier:
- Prepare well in advance
- Transition some of your responsibilities onto key employees
- Simplify your corporate structure
- Review your tax position with a tax accountant
- Upgrade your financial statements & internal reporting systems
- Resolve any legal matters
- Normalize working capital
- Carry out an operational profitability audit and optimize your product/service mix
- Finally, document everything
What to Expect When Working with FirePower
At FirePower Capital, we have sold dozens of businesses since 2013 and have refined a process specifically built for private, owner-operated businesses in Canada. You will navigate the pitfalls of a sale and conclude a transaction at a compelling value and terms. Our approach is structured, technology-driven, outcomes-driven, yet customized, creative and transparent.
(1) Develop deal collateral
We prepare a “no-names” one-page teaser that provides a powerful snapshot of the business. We also develop a comprehensive Confidential Information Memorandum (CIM) that covers all aspects of the business. It highlights the positive features of the business and addresses the troublesome ones, earning the trust of potential buyers and setting an honest and productive tone for the negotiations that follow.
(2) Identify prospective buyers
Our analysts sift through our proprietary database of 3,886 strategic and financial buyers (as of Nov 20, 2018). We also search limited-access M&A marketplaces, cross-check with recent buy-side mandates we track, and catalogue relevant industry participants. Prospective buyers are grouped into tiers in order to prioritize our outreach efforts. Every potential buyer we identify is reviewed and approved by the client before contact is initiated.
(3) Build or reinforce connections
Dedicated specialists on our deal team reach out to decision makers at the identified prospects and deliver a compelling “deal brief”, either by phone or email. On average, these specialists will make approximately 90 connections per week. Our specialists leverage our proprietary deal-management software platform, built on Salesforce and HockeyStick, to facilitate quality connections and continued follow-ups.
(4) Create an auction environment
All buyers who show interest are required to sign an NDA in order to know the name of the company, receive the CIM and to ask questions. After shepherding the most interested buyers in the right direction, we set a deadline for offer submissions, which creates a competitive environment. We then review all offers with respect to price, fit, terms, and conditions, and pit the proposals against each other to negotiate the most favourable Letter of Intent (LOI).
(5) Conduct due diligence
After the seller signs the preferred LOI, the parties enter into an exclusivity period where the buyer is granted access to a secure Virtual Data Room (VDR) we host. We actively manage a buyer’s due diligence process and curate communication between all stakeholders to ensure nothing jeopardizes the deal. This VDR allows for realtime tracking, user management, and security controls.
(6) Finalize purchase agreement
With due diligence moving along, our deal team leads and negotiates the definitive agreements, with support from legal counsel, tax specialists and accountants. We comb through every clause, while keeping all parties focused on the big picture—it’s too easy for experts to not see the forest for the trees.
(7) Close the sale
Our close rate is over 3 times our competitors’ average (Firmex, 2016). There are so many ways a deal can fail, and nearly every deal will die at least once. We are unfazed: we hustle and never quit until we reach a satisfactory outcome for our client. Only then is our job done.
- Our May 2017 Market Insights Newsletter on how to prepare for sale.
- Our interview with Betakit for their “Ask An Investor” column on how to sell your company.
- Visit our FAQ page to read popular questions on selling your business.
From the archives: October 2018
Buyers' Perspectives in a Competitive M&A Market
“Beauty is in the eye of the beholder”. It’s an age-old saying, but if you change a couple of words – the first and…
Applied Comfort is a designer and manufacturer of non-standard HVAC systems for commercial, industrial and institutional facilities. FirePower guided the company in its search for a strategic partner, concluding a transaction with a UK-based strategic, with a complementary product portfolio and distribution capabilities.
Decisive Technologies is a value-added reseller of IT hardware, and BriteSky Technologies is a Canadian, managed cloud services provider (collectively “Decisive”). After five years of successful organic growth, Decisive needed additional capital to accelerate its expansion plans. The shareholders were adamant that a new investor should have values and a vision for the company that aligned with theirs, and FirePower was engaged to find an investor and negotiate a deal structure that met all of the shareholders’ objectives.
FirePower was engaged to prepare PrintFleet for an exit to strategics, and guide the company through to closing. Four weeks before closing, the buyer with whom PrintFleet signed an LOI following a competitive auction, a Japanese Fortune 500 company, terminated the deal because of an internal reorganization. Far from giving up, FirePower re-ignited conversations with a Texas-based strategic who had done well in the auction, and closed without any major challenges at an attractive price, terms and conditions.