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January 22, 2024

How to Create a Positive Sell Side M&A Experience

Selling your business is never easy. Aside from the emotional stress that it provides, it can also be detrimental to the business if it's sold to the wrong company. Oftentimes, during the process, it can also serve as a massive distraction to the operations, harming the business in the process. In this article, we will discuss how to create a positive sell side M&A experience with Swapnil Shinde, CEO at Zeni. 

“You should sell when you’re in an amazing phase in your company, and you have built something that is attractive to a lot of people. Capitalize on that.” - Swapnil Shinde

Swapnil was the Co-Founder of Dhinganam who was eventually acquired by Rdio, and Mezi who was eventually acquired by American Express. Despite his exit, he strongly believes that founders shouldn't focus on selling or aiming for an IPO. Instead, the priority should be solving a problem in a unique way.

However, there may come a time where the company or the product itself has become better suited as features rather than standalone products. That’s the time when selling becomes an option.  

How to sell a business

When selling a business, it is always better to be reactive. As a founder, you're in a stronger position when someone approaches to buy, rather than actively selling. When choosing the right buyer, it's not just about financial gain. Consider employee retention and the product's potential trajectory in the coming years. 

Bankers are not necessary when selling a business, but they can open doors if the founder lacks connections and wants to engage with multiple parties. 

Sell when the company is thriving and attracting attention. While one successful phase might pass, another will follow. Capitalize on these moments of success. Approach the acquisition with the same urgency as a crucial product release. By maintaining this mindset, the acquisition process can be expedited. 

Managing diligence

Managing the due diligence process can heavily distract the daily operations of the business.  Because of this, it's best to limit the information to a select group who can assist with the process. Once the talks become serious and there's a mutual understanding, that's the time to inform the broader audience.

It is also best that the buyer understands the process needs to be as painless and as fast as possible. Demand a definite timeline on the due diligence process, so the buyer will only focus on the must-have items. 

Lastly, good record-keeping will go a long way. By managing all the important documents in one place, it becomes super easy to facilitate the diligence process and entertain the buyer for whatever they may need.

Role of sellers in Integration planning

Both sides must be actively involved in the integration planning. With a dedicated team from the acquiring company and core executives from the acquired company, it's essential to set clear goals. Regularly measure progress, understand the necessary steps, and ensure all parties are aligned to achieve a successful outcome.

Having a good relationship with the other party is also a recipe for success. Without a solid relationship, both parties operate with separate agendas. Everyone must be on the same team and are aligned in one common goal.

During this time, it is also advisable to assess the culture fit between the two companies. Both parties need to be compatible with matching styles and vision.

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