Third Annual Series on Business Exits

Prepping the Princess for the Party: Is Your Business Ready to Sell?

(Part I of VI): The Right Investment Banker is Key; GrowthPoint Technology Partners (Silicon Valley)

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This week on “In Process: Conversations about Business in the 21st Century,” we begin our third annual series of podcast episodes dedicated to the topic of preparing and selling your business.

This year we have structured our “exit series” as a virtual event with a new downloadable book available once the 6th podcast episode is released on the dedicated website www.preppingtheprincess.com.

According to a 2019 business trends study, 48% of business owners who want to sell, have no exit strategy. Exit planning is essential to get the highest value for your business. Many business owners are unprepared to sell:

  • 58 percent have never had their company appraised;

  • 48 percent have no formal exit strategy;

  • 37 percent have no structures in place to shield cash proceeds

In the first installment of our six-part podcast series, Trusted Counsel speaks with GrowthPoint Technology Partner’s Managing Director Vijay Rawat about how to find the right buyer for your business in the broad universe of prospects. GrowthPoint Technology Partners is a Silicon Valley based technology investment bank that provides financial and M&A advisory services to technology companies.

Rawat believes this is a fantastic time to consider a sale for most types of companies and there are a number of factors that are driving technology M&A. “One factor is that private-equity groups have raised a record amount of money and they need to put that money to use. Secondly, the public market is at an all-time high despite trade tensions with Mexico and China. Lastly, large companies have trillions of dollars of cash on their balance sheets (earning low returns) and they need to put that money to use.”  

It is critical for business owners to educate themselves about valuation and the underlying business considerations that buyers are typically looking for. According to Rawat, education and preparation creates a solid positioned seller. If owners decide to sell their businesses―but haven't made a commitment to learn and prepare―it will be difficult to market their business and  attract the right buyer.

Our third series is rich with substantive recommendations and current transactional examples and includes conversations (and a physical and electronic book of information) on:

  1. choosing an investment banker with GrowthPoint Technology Partners,

  2. the wealth growth, philanthropy and other personal planning and structures founders and other owners in the business should consider prior to the sale with Wilmington Trust,

  3. the financial analysis, tax and accounting planning and actions businesses must take in connection with preparing for the exit with Aprio,

  4. ) the legal planning and process to expect with Trusted Counsel’s tax and mergers/acquisitions colleagues, and

  5. the planning and 20/20 hindsight in connection with actual transactions courtesy of Trey James, co-founder and former CEO of Xcentric Group, LLC which sold to Right Networks, and Peter Paglia, the former COO of OnBoard Security which sold to Qualcomm earlier this year.

The hot market for M&A continues with businesses looking to deploy and invest substantial cash. With tax reform and growing cash reserves, no red flags of it slowing down. But while the M&A outlook is positive, a considerable number of transactions still fall short of achieving the results business owners envisioned. Companies and private equity firms often place the blame on external factors, but more and more, they are recognizing the need for more effective due diligence and earlier preparation to ensure that revenue projections materialize.

During the course of the podcast, entrepreneurs, business owners and C-level executives will learn about:

  • How companies can ensure deal success through process and procedure

  • Factors that could impact M&A activity in the year ahead

  • The difference between a financial buyer and a strategic buyer

  • Factors that make a business sellable

  • Three categories of buyers along with challenges and opportunities for each

Learn more about our virtual event by clicking here. Understand the steps involved with retaining an investment bank’s services by streaming the conversation in its entirety in the player below, or download it to your mobile device via iTunes. Don’t miss a single episode, subscribe to our show “In Process Podcast” on iTunes to receive this episode as well as future episodes to your smartphone.