I have had many experiences that have helped me become a better board director, business leader, and advisor. One of the most important was selling our business to a public company. Selling a business to a public company is like being in a room with an 800-pound gorilla. They have more resources, more lawyers, and more staff than you have.
The general partner of an M&A firm was on our board, so we were ready to go when we received the offer. We set up a secure data room for all documents. The company was a synergistic buyer. It necessitated the coding of sensitive information such as customer data, etc. The more information we provided, the more they wanted. They threatened to walk away several times, and we thought about ending the negotiations many times. You need a good M&A firm to get you through these low periods. The process seemed endless, but we successfully got the deal done. A lesson learned is to hire a great team of advisors. It can be expensive but is always well worth it.
I recommend the following:
1. Insist that your M&A firm find other buyers. The best situation for the seller is to have a bidding war.
2. Conduct due diligence on the buying company. It is important to know everything about the buyer, especially if you intend to stay with the company or have contingencies.
3. Get a deal where most or all of the cash is upfront. You have to be happy with the cash you get when the deal closes. Any contingencies based on sales and customer retention may sound good initially, but may not happen. And, if you take stock, the stock may go down before you can sell it.
The most important advice I can give is: Selling your company is stressful, and you should make sure you understand and agree with everything in the final agreement before you sign on the dotted line.
What other recommendations can you give?
For more on boards, read my article: 6 Reasons Why Every Board Needs “Fresh Eyes”
P.S. – Do you need an Outside Director, Advisory Board Member, Trusted Advisor, or Interim CEO? Someone who can help you see your business and your goals through “Fresh Eyes.” Contact me and I will work with you to look at where you want to go and help you find the best way to get there. Sometimes all it takes is someone with a fresh viewpoint, unencumbered by company politics or culture to help find the right solution.