Prepare Your Startup for Acquisition in 5 Easy Steps

December 2022

Prepare Your Startup for Acquisition in 5 Easy Steps

For many startup founders, getting acquired is the ultimate goal. A successful acquisition will help you scale your business to new heights and maximise your return on investment. You’ve worked hard to build your startup and deserve to reap the rewards!

The global M&A industry reached a record-breaking $5.9 trillion in 2021 and the market continues to prosper in 2022. There has never been a better time to sell a business!

So what do you want from an acquisition? For most business owners, it’s the ability to sell quickly, easily, and for the best price. If you’re looking for advice on how to sell your startup, you’ve come to the right place!

We’ve put this blog together to guide your startup journey and help you achieve what you want from an acquisition.

Step 1: Set acquisition goals

The first step is to identify your acquisition goals. Do you want to sell one business and dive straight into another? Are you hoping to achieve a six or seven-figure exit so you can retire?

Once you know what you want to achieve from the sale, you’ll be able to create a strategic plan and start working towards your goal. Make sure you have a clear understanding of how much you want for your startup and any other conditions you would like to be met.

Step 2: Make your startup attractive to buyers

You will attract more buyers and command a higher price if your startup is in prime condition to sell. So, address any weaknesses and focus on the elements that will make your business attractive to potential buyers.

  • Get your records in order: An interested buyer will carry out extensive audits on your startup. Discrepancies can destroy acquisitions or seriously harm your valuation so it’s vital that your legal, accounting, and HR documents are in order.
  • Maintain good finances: Invest in technology to streamline your business finances and keep a clear record of past earnings and financial forecasts.
  • Create SOPs: Implement Standard Operating Procedures (SOPs) to streamline and optimise your business operations. Your goal should be to create a set of efficient processes that can easily be taught and replicated.
  • Prioritise company culture: Buyers look for businesses with good company culture and staff that are engaged and productive. Creating a loyal team and strong company values will impress potential buyers and give you a competitive advantage.

Suggested reading: Everything you need to do to sell your startup

Step 3: Get advice from an M&A professional

Hiring an M&A professional might seem like an added expense but their support can be invaluable. Navigating an acquisition is difficult and the last thing you want is to be distracted during the transition process. An M&A expert will ensure that things run smoothly at each step and help you get the best possible outcome.

TIP: Looking for expert M&A support? Sign up to Foundy and connect with Europe’s leading M&A advisors and legal experts.

Step 4: Get your valuation right

Did you know that overvaluation is one of the biggest reasons why profitable startups fail to attract acquisition offers?

Of course, you don’t want to undervalue your startup, but you must also be realistic and strike the right balance. Getting your valuation right is key!

Startup valuation is more an art than a science

Founders often evaluate their startup’s worth by applying a multiple to revenue or EBITDA. This seems logical, but there isn’t a straightforward formula to follow when valuing your startup.

You need to consider additional factors such as consumer demand, customer base, brand reputation, and anything else that makes your startup unique.

Suggested reading: 5 ways to negotiate the highest startup valuation.

Step 5: Join a startup selling platform

Selling platforms like Foundy have revolutionised the M&A market and made selling a startup quicker, easier, and more cost-effective.

How to sell a business without a broker

Business brokers typically take a commission fee of between 7 and 15% which can be a huge amount of money depending on the sale price. That’s pretty unfair, right?

The good news is that you can reduce your commission fee and save significant amounts of money by selling via an online platform. You can set up an account on Foundy for free and start advertising your startup to potential buyers in just 15 minutes.

Early preparation is the key to acquisition success

Startup sales are soaring and it’s the perfect time to sell a business. If an acquisition is your goal, you should start planning from day one. Follow these simple steps to make the process easier and help you prepare for a successful acquisition.

List your startup for free with Foundy!

At Foundy, we offer an all-in-one platform where founders can advertise their startups to credible buyers, seek advice from professional M&A advisors, and find other startups to acquire. Our goal is to help founders maximise their returns by making the acquisition process as quick and efficient as possible.

Join Foundy for free today or reach out if you have any questions - we’re always happy to help!