The Net Of The Deal
Let’s say you’ve decided it’s time to sell your business. You’ve hired a broker, an investment banker, or an M&A professional (an exit partner) to help you get it sold. You’ve done your preparations. Your exit partner begins to get the word out into the buyer channels.
Pretty soon, you start to receive offers on your business. One comes in at $18.5M. Another comes in at $22M. Of course, your first reaction is to get excited about the $22M offer.
However, offers can be deceiving.
Don’t just look at the top line number presented in the offer. Break it down. Look at the entire offer carefully to be sure you understand the various forms of payment you will receive. Look at the timing of those payments. Determine which payments have risk associated with them and how much risk. Look at the tax implications. Talk to your accountant and make sure they thoroughly analyze it for you. Talk to your attorney and do the same.
Remember, your goal should be to figure out your net. How much of the offer will you actually realize? Often times, an offer that looks like a lower number at first will be your best deal.