Deciding to sell a business is one of the most significant decisions a business owner can make. You need both a financial fit and a cultural fit for a smooth transition.

Preparation (1-2 Years Before Sale)
To ensure a successful outcome and optimal valuation, planning should start about one to two years before taking your company to market. Key areas to prepare include:

 

1. Management Team: A strong senior & 2nd tier management in place willing to stay on

2. Growth Strategy: Buyers seek clear opportunities for growth, such as new products or services, market expansion, and/or increased market share.

3. Financial Statements: Buyers assess businesses using accrual accounting. Ensure your financials adhere to GAAP and must have third-party audited financial statements and at least 3 years tax returns to boost credibility.

4. IT Systems: Adequate security and infrastructure are vital to support ongoing operations that scale with the business.

Dax - M&A Team
Dax will help craft a compelling business "story," a key part of the Confidential Information Memorandum (CIM), which presents your company’s strengths to potential buyers.

Solicitation of Buyers Indication of Interest
Once preparations are complete, Dax will reach out to potential buyers, facilitate non-disclosure agreements, and distribute the CIM. Buyers review the information and may ask initial questions, which are managed by Dax to ensure time efficiency for you and your management team. This phase concludes when buyers submit non binding indications of interest, outlining valuation ranges, deal terms, and their rationale for being the right buyer, both culturally and financially.

Non-Binding Letter of Intent
Top bidders proceed to the due diligence phase, where they delve deeper into your business. They’ll visit your facilities, meet your team at a company presentation, and assess cultural fit. Buyers gain access to a secure virtual data room with detailed company and personnel information. The phase ends when an exclusive non-binding letter of intent (LOI) is signed, solidifying the buyer’s offer and key terms and now you begin exclusively negotiating with the top candidate.

Closing
The focus shifts to final diligence and negotiation in order to obtain a binding purchase agreement to both buyer and seller. Buyers will want additional information such as:

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• Accounting: Financial statements, tax compliance

• Legal: Corporate structure, HR, any pending litigation, management background checks

• IT: Systems security, intellectual property verification

• Facilities Review: Toxic waste, hazards

• Warranties & Representations: Disclosed by the buyer

• Management Compensation: New plan post sale agreed upon

• Final Purchase Agreement: Finalize binding purchase agreement, agree on net working capital, and other supporting transaction documents

Time Frame
The entire sell side process takes approximately 26 weeks total from the initial hiring of Dax to receiving proceeds for the sale of your company.


 

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