Navigating M&A for a start-up

Many start-ups may always operate with the idea they’d like to be bought by a larger company, and while this can be a likely scenario, it’s important to put your focus on creating a business that will hold real value for a potential buyer. This can help business transfer agents to find the best acquirer in the market.

Here are three tips for successfully navigating the world of M&As as a start-up.

Keep good records

Start-ups and small businesses may not always put their focus on detailed record keeping, and that can come back and haunt them if they’re in the midst of an M&A deal. Most companies that are going to buy smaller start-ups tackle the situation in a systematic, regimented way that requires access to the detailed records they’re going to want to see.

If you’re diligent from the start of your business as far as the collection and maintenance of data relevant to a possible merger situation, you’ll be prepared if it does happen.

The maintenance of proper data and records can derail a deal if not done correctly.

Get affairs in order

One of the biggest problems many start-ups face as they’re ready to make a deal is that they’re disorganized or messy in their workflows. This relates a bit to the first tip on this list, and it’s important to emphasise.

Start-ups often operate with a fly-by-the-seat-of-your-pants approach, and that’s what fosters the innovation that makes them successful, but this can prove problematic during the acquisition process.

Along with making sure your records are in order, it’s a good time to setup a virtual data room. You can organize everything in a convenient, easily accessible way. If you go into the selling process already having a data room set up, potential buyers are going to see you as a more compelling prospect.

If you’ve got your ducks in a row, so to speak, and you’ve set everything up in a data room, potential buyers can start the process of doing their due diligence more seamlessly, and you’ll save everyone involved a lot of time and difficulty.

Maintain a sense of credibility

You always want buyers to feel as if you’re a credible start-up with a positive reputation, and this isn’t built overnight. Before ever really launching the idea of looking for a buyer, put a significant amount of attention on building your reputation and your credibility.

What may seem like a minor issue, such as an angry former employee, may come back and pose a big problem during M&As. Rather than facing it when it could be too late, deal with it early on.

If you’re consistently building your company so as to create value for a potential buyer, then it’s easier to give the idea of credibility the attention it deserves in a start-up.

A conversation is never wasted. We’re confident that we can give you all the help you need, but we’ll tell you if we think there’s a better option for you.

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