Step-by-Step Guide to a Successful Sale or Capitalization
1. Defining the Transaction Objective
Before starting the process, it’s essential to define why you want to sell or raise capital. Some of the most common reasons include:
- Business expansion
- Financial restructuring
- Partner exit
- Funding for innovation and technology
2. Identifying the Ideal Buyer or Investor Profile
Not every buyer or investor is a good fit for your business. One of the biggest mistakes in M&A is closing a deal with a party misaligned with the company’s goals.
That’s why it’s critical to seek out strategic investors who have synergy with your industry and can add value to the business.
3. Fair Valuation and Pricing
Setting the company’s price is one of the most critical parts of the process. A well-done valuation considers:
- Recurring revenue and future projections
- Tangible and intangible assets
- Market share
- Growth potential
4. Strategic Negotiation and Due Diligence
The negotiation phase requires skill and experience to ensure the seller’s interests are protected. Additionally, due diligence (preliminary audit) is essential to avoid surprises and mitigate legal and financial risks.
