Published on January 7th, 2014 | by Jose Vasquez0
5 Things to Know when Selling Startup Tech Companies
Keep these items in mind if you plan on eventually selling your startup tech company.
While it’s not prudent to start thinking about selling your startup when you’re first starting to generate momentum, eventually the time will come for you to consider your end game options. Selling your company is only one possible option, with the others being going public or keeping the company private and choosing a successor, but it is a common option for startups with a high potential for mass success.
If you’re in the middle or late stages of company development, it’s time for you to start thinking about how and why you would sell your company. While there is a practically infinite number of factors to consider for the decision, make sure your attention is focused on these five:
- Businesses are what sells, not entrepreneurs. You might identify yourself as the face or the core of the business, but ultimately your buyer is going to make their decision based on the business itself. Take yourself out of the equation and look at your business for what it is. You might find it to be enlightening.
- Your employees will face a tough cut. Some of your employees will appear valuable. Others will not. When your company is bought out, your buyer will make some tough decisions about who is to stay and who is to go. Be prepared for that eventuality.
- Immediate cash flow matters more than ever. While most short-term debt can be a good thing, in the eyes of an impending buyer, any debt is an obstacle to profit. Remember that cash flow and profitability are extremely important to your buyer.
- Impulsiveness is a killer. Don’t sign anything you don’t understand, and don’t be too quick to make any deals.
- Sales affect more than just a business. When you consider selling your business, you’ll think about the black and white figures more than anything. Just remember how it’s going to affect those around you.
If the time comes to consider selling your business, don’t rush anything. Carefully proceed with the above knowledge and seek the counsel of your legal and financial advisors.
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