So you\u2019ve decided you\u2019re ready to sell your software business. Great! Now what?<\/p>\n
As a business owner, reaching the decision that you\u2019re ready to sell your business can be a lengthy and often emotional process. However, it\u2019s only after this decision is made that the real work begins and you then have to figure out the next steps.<\/p>\n
How do you decide who to sell to? How involved do you want to remain after the sale? What do you need to prepare? What’s going to happen to your team? Who should be advising you?<\/p>\n
There are a lot of questions to think about. Luckily, we\u2019ve been there and we\u2019ve got the answers.<\/p>\n
There are a number of key steps to selling a business, which generally take anywhere between 3-18 months to complete. Planning \u2013 of course \u2013 comes first.<\/p>\n
If you\u2019re running a strong, reliable business, a lot of the \u2018planning\u2019 will naturally be part of your day to day. Clean books. Organised contracts. A strong team. These are all success markers in your everyday, and so, in this regard, planning for an acquisition is less about making a sudden change and more about continuing to run a successful business.<\/p>\n
Keeping clear documentation will stand you in good stead when the time comes and enables you to address any weaknesses before you reach out to potential buyers. All this will ensure you\u2019re in the strongest position possible when those conversations begin.<\/p>\n
When you reach this crucial point, there are many factors you need to consider, and it\u2019s not all about price.<\/p>\n
There is no right or wrong answer for this, as you might find a buyer who you\u2019ve known for several years, or meeting your acquirer could be the trigger which begins your acquisition journey.<\/p>\n
However, we would encourage you to nurture and maintain relationships with potential buyers, whether that be by attending events or staying engaged in founder communities. The decision to sell might be several years away, but you can still acquire vital learnings and insights from being in conversations with software buyers. That way, when the time comes that you decide you are ready, you will already have key knowledge of who the right buyer might be and who might align best with your business culture and strategy, rather than starting from scratch.<\/p>\n
*Remember* – there\u2019s no amount of planning that can make things perfect. At some point your judgement as a business owner will come into play and ultimately you will need to choose the buyer who feels right for your business.<\/p>\n
Once you\u2019ve decided what type of buyer you want to sell to and found one that you think aligns with your goals and priorities, it\u2019s time to start the formal process.<\/p>\n
At this stage you will need to provide some information so that initial valuations can take place. You won\u2019t need loads of detailed documentation at this stage, but the cleaner and clearer your information is, the easier and faster this stage will be.<\/p>\n
This will often include:<\/p>\n
As you prepare, you will also want to show your intent to your buyer. This means signing non-binding letters of intent to confirm high level terms and key considerations, and the beginnings of sharing goals and data so a formal valuation process can start.<\/p>\n
Due diligence is the process of gathering all the required information for a sale. This is usually the key milestone that founders jump to when they are thinking about selling their business, but it\u2019s important to understand that this is not a test or an audit.<\/p>\n
A potential buyer will go through due diligence to verify the financial information underpinning the deal, ensure the legal documentation is in place for a sale to complete, and identify and prioritise actions that need to take place post sale. It allows for smoother post sale integration and helps unlock growth potential. This will include examining financials, contracts, your tech stack, team structure and operations, and can take anywhere from 4 weeks up to a few months depending on the complexity of your business.<\/p>\n
This is why it\u2019s so important to be prepared for this process, as if certain information is missing or incomplete, due diligence will be extended and the potential sale of your business could be severely delayed.<\/p>\n
To reduce the time spent in due diligence, preparation can begin in advance of being ready to sell.<\/p>\n
At this point, the more organised you are upfront, the smoother due diligence will be.<\/p>\n
Many software businesses will benefit from having some advisory support in place. At the very least, you need an M&A or Corporate Finance lawyer available to handle the legal complexities of the sale, and an accountant. You may also want to engage a specialist tax advisor. We are happy to make recommendations here if needed.<\/p>\n
These people will help ensure you have all the correct information surrounding the three key areas of due diligence: tech, legal and financial. In short, this covers whether the product is maintainable, secure and can scale; whether ownership is all accurate and regulatory requirements specific to the industry are met; and whether revenue, margins and key metrics meet required benchmarks.<\/p>\n
In addition to external advisors, you also need to consider who should be involved internally, as, crucially, you need to ensure due diligence doesn\u2019t affect the day-to-day running of your business.<\/p>\n
Therefore, this should be initially limited only to those on a need-to-know basis across your key leadership team, such as the CFO, CTO and COO.<\/p>\n
As things move forward, depending on individual circumstances you may need to bring in developers or someone from a specific area of the business that is being reviewed during due diligence. You may want to brief key managers at a topline level as things progress, but full transparency across the business is not necessary at this point, and can sometimes lead to complications further down the line.<\/p>\n
*Remember* – this isn\u2019t a test and buyers understand there is no such thing as perfect. Due diligence is about understanding risk and where you need input and assistance in the next stage of growth to unlock potential. There’s very little that can\u2019t be fixed, especially when working with the right acquirer.<\/p>\n
ClearCourse has a proven track record of acquiring leading, industry-specific software businesses that align to our strategy, and helping them generate continuous growth through dedicated expertise, supporting operational and GTM functions, and our unique embedded payments offering.<\/p>\n
Our M&A team have decades of experience at this and are committed to making the process as easy and transparent as possible.<\/p>\n
If you\u2019re interested in finding out more about joining ClearCourse and finding not just a new home for your business, but a new beginning, contact our M&A team directly on acquisitions@clearcourse.co.uk<\/a> or visit our M&A page<\/a> to find out more.\u00a0\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":" So you\u2019ve decided you\u2019re ready to sell your software business. Great! Now what? As a business owner, reaching the decision […]<\/p>\n","protected":false},"author":3,"featured_media":10081,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"full-width-container","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"set","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[24,17],"tags":[],"class_list":["post-10078","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general-news","category-news"],"yoast_head":"\n