Strategy: Exit the Stage Right
Do You Want to Work for These People?
You become an employee the day after you sell (that is, if you continue working for the company). Be sure you trust the people you’re selling to if you want to continue working there. Discuss in detail the acquirer’s plans for your business prior to the sale, and find out his or her track record with other acquisitions. Know what it means to management and the balance of employees to sell and work for the new owners. After closing the deal, the work environment at the company will never be the same.
Should You Find an Angel Investor?
Owners of smaller catalog companies say they prefer to find an “angel investor” as opposed to selling. That’s easier said than done. It’s difficult to find an outside financial investor who’s willing to invest in your company. Angel investors generally are family members and/or friends who like and trust you. People outside your core group of family and friends might be willing to invest, providing they have either a vested interest in your company or a passion for your mission. If you find an angel investor, you’ll have to give up a considerable amount of equity in exchange. Is this something you’re willing to do?
Don’t talk to a prospective buyer until you both sign a confidentiality agreement. And even then, do things in order, so that you don’t give out sensitive information before you have to. The agreement you sign is only as good as the people who sign it. Neither party wants to end up in court debating if someone violated the confidentiality agreement.
When it comes to selling your business or finding an investor, be realistic and define your expectations.
Stephen R. Lett is president of Lett Direct, a catalog consulting firm specializing in circulation planning, forecasting and analysis. He can be reached at (302) 537-0375, or by e-mail via his Web site: www.lettdirect.com.