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Corporate Finance | 4 Things to Consider before Selling your Company

08 01 2024 Corporate Finance
Corporate Finance | 4 Things to Consider before Selling your Company

A sales transaction is a key moment a company's life with significant medium to long term impacts.

To ensure the success of the operation, for both partners and investors, we share with you 4 aspects to consider before starting the sale/raising capital process.


1. Reason for the Operation

Before moving forward with an Operation, partners/shareholders must define the main goals and motivations. There may be drastically different logics with impacts on the entire negotiation process (e.g. 100% sale due to lack of succession vs raising capital for expansion). With this in mind, certain conditions must be defined, such as the shareholding to be sold, transition period (willingness of partners to support new owners), management of core assets (e.g. property owned by partners), among other critical factors.


2. Prepare accounting

In the course of their activity, companies are prepared to be functional and efficient, and some relevant aspects may not be considered in a logic of valuing the organization.

Therefore, in a preparation perspective, some relevant aspects must be identified and monitored, namely:

  • Non-operating income and expenses;
  • Extra operational assets (e.g. real estate);
  • Bank debt and cash availability;
  • Significant variations in working capital;
  • Accruals, deferrals or other accounting factors.


3. Management and HR Team

With regard to HR, there are also a set of factors that must be taken into account:

  • Independence from the CEO in making non-strategic decisions (avoid one-man show logic);
  • Existence of a management line capable of ensuring the development of the business after the partners leave;
  • Internal skills in the commercial, financial, administrative and human resources areas.

Preparing a second line of management is a success factor in a transaction, which may also have an impact on valuation.


4. Conduct a Business Assessment

A company sale/capital raising process is a business transaction between two parties, where each will seek to maximize their advantages.

It is imperative to understand the real value of the Company and its Equity in order to have in-depth knowledge of its value and, at the same time, carry out negotiations based on a solid and appropriate value.


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