Companies get bought not sold. But even if your dream buyer turns up with an offer you can’t refuse, could you close the deal? Are you ready for it? Have you laid the groundwork, or would you be caught unawares and scrambling to respond?

Selling your company isn’t an event. It’s a journey; one that starts well before the deal gets done. You don’t need to hang up a for sale sign, but the most successful exits come from good preparation, strong positioning, and proactive planning. You need to start thinking about this 12 to 24 months in advance of any potential transaction.

At FirstCapital, we’ve helped founders consistently unlock better outcomes. Here are 5 things we recommend you do now.

1: Get to know the people who might buy you

The most successful acquisitions don’t come out of nowhere. In most deals, the buyer already knows (or knows of) the company and has probably been tracking you on a list of prospective acquisition targets for some time. If they don’t know you (a) they might buy someone else or (b)  it will take time to get all their stakeholders aligned and agreed, introducing delays into any process.

We recommend that you draw up a list of your potential buyers well in advance of any potential exit:

• Who are the most likely buyers?
• Why? What are they looking for?
• How important is this to them?

Once you’ve created your shortlist of strategic acquirers, start building their awareness of you. Go to the same events. Try to get some shared customers (or make it painful by beating them in pitches). Find the decision makers in their organisation who would champion your story and get to know them.

SMART (ie strategic) deals don’t just happen. Developing awareness amongst your buyer group is key. As Deborah Magid, formerly Director of Strategy at IBM Venture Capital Group, puts it, “We go to places where startups hang out. If they give a good pitch, I’ll go up and give them my card. We usually don’t meet startups randomly, we use the community and network that we’ve built up in order to meet companies who look really promising”. You can watch her full video on how to engage with IBM here.

2: Become a market leader

Market leaders get premium prices. Owning your niche is valuable and builds scarcity value.  Defining your strategy and focusing on excellent execution, building a leadership position in a market that is important to your buyer/s drives value.

Ask yourself:

• Are you the go-to company in your vertical?
• How do you evidence this (e.g. market share, price leadership, win rates)?
• Would your ideal buyers see you as an essential part of their future?

Going deep in a vertical? Show dominance. Want to appeal as a horizontal platform play? Demonstrate that you can successfully expand across sectors. You don’t need to do it all, but you should generate enough evidence of success that convinces your buyer that you’re a must-have acquisition to secure their future in this space.

3: Prepare for due diligence

You’ve signed a deal with a buyer, and now you need to close it as soon as possible on the agreed terms. The very last thing you want is to trip up in due diligence as a result of things you should have done and didn’t, or gaps or problems due to poor admin, so get your house in order. Some examples of things to check include:

• Legal: ensure you are compliant with all relevant legislation, and have policies to prove it (e.g. data protection, employees etc)
• Financial & tax: tax can be very complex, and any remedies that include gong to the tax authorities to sort out will add months to the process, so ensure your tax affairs are all in order. In our experience buyers will never accept any tax liability for pre-transaction affairs, so it’s on you to sort out. Do you have good historic financial information, are your KPIs measured and tracked?
• Contracts: do any of your key customer contracts have any unusual clauses or conditions (e.g. termination on change of control can be a big one)? How about your IP? Do you own everything or does anyone else have any claims?
• Company books: are all the company books up to date, have all share transfers been recorded, are all options properly granted etc?
• Ligitation or disputes: have these been fully resolved?

A clean, well-documented company builds confidence during diligence, reduces the risk of negative surprises and helps the deal to close faster, on the agreed terms.

4: Build relationships with the right advisers

To get a great exit, you need to have people around you to help. The right advisers not only help with the process (which is very stressful and time-consuming in itself), but they will also know your sector, know the buyers and are able to negotiate extra value because they understand how to leverage what is important to the buyer, for your benefit.

These people can:

• Introduce you to the right people and foster competition in the deal
• Advise on optimal timing, based on buyer demand and priorities
• Help refine the right messages to attract the right buyers

And most importantly you’ll have a team supporting you who augment your team with the experience to help you maximise the outcome.

 5: Perfect your pitch

What would you say when the phone rings and it’s your prospective buyer on the line? Do you have your pitch perfected? Do all your public-facing materials tell the same story? So many times I hear founders say “our website needs updating and it doesn’t reflect where we are”. Are you telling your story in the right way to attract the right attention?

In particular, European founders often undersell themselves, especially compared to their US counterparts. Don’t underplay your achievements; revisit your deck, your story, your messaging, your website. Be bold and ambitious with your vision. Test your messaging out with some people and refine based on the feedback. First impressions count, so don’t give people a reason to say no.

Final Thought: The sooner you start, the better

You don’t have to be planning to sell tomorrow to start exit planning today. The earlier you start planning, the better.

If you want help navigating the path to exit, get in touch. We’re always happy to share insights, make connections, or help shape your strategy.