Do These Six Things Before Trying to Sell Your Company

One of the most rewarding parts of leading the Next Coast Brokerage business is engaging with IT and BPO business founders. These are men and women who had the courage to establish their businesses in often difficult environments and gathered the strength to guide their company's growth, which, as we all know, is never a simple process.

All that hard work should pay off when it comes time to sell. However, many founders fail to understand that, just as they had to create the proper foundation to grow their business, they need to get things properly aligned when it comes to selling the business to an investor.

At Next Coast Brokerage, we have spoken to hundreds of BPO and ITO companies seeking to buy and sell since launching in 2018 and have learned a great deal from these interactions. (These discussions are a key part of our regular match-making service.) Here are six critically important steps that all founders should follow when getting ready to sell:

01Create a company profile presentation

When selling your company you will be telling a story. The Company Profile is usually the first document you will present to an investor and should outline your business so that it appears attractive and compelling. This document should include: locations, the company's market strategy, company performance, the unique value proposition, management team and ownership, and condensed financials with projections.

02Clean up and make your books presentable

Keep monthly accounts reconciled to underlying records, and explain unusual items and proposed earnings adjustments. An audit and a quality of earnings review serve different purposes. Discuss the scope that fits your records, buyer, financing, and reporting requirements with your accountant and transaction advisers. Stout explains how an earnings review differs from an audit.

03Prepare your senior managers so they are not blindsided

During the sales process think about which managers may be called upon to speak with the buyer, such as the CFO, CTO, or VP of Sales and Client Services. The last thing you want in your business is to have managers or employees spreading negative rumors about the company being sold. Be honest with your core team and let them understand the importance of keeping things confidential.

04Build your dataroom, and make sure it's stellar!

Different buyers will want different information during due diligence. When building the dataroom make sure the folders are well organized and the documents are filed correctly. I had a client who built a dataroom that was unorganized, and the investor's lawyer killed the deal. We reorganized the data and were able to get the investor to take a second look. Not only were they impressed, they re-engaged in negotiations.

05Be reasonable about what your business is worth

Be realistic about what a buyer is offering and the assumptions behind it. Compare relevant transactions, earnings definitions, customer retention, service mix, geography, and management depth with an adviser who knows your market. Ask how much of the price is cash at closing, deferred, contingent, or held in equity, and how purchase-price adjustments could change the proceeds. Goodwin’s 2025 guidance explains the components of an acquisition offer.

06Consult a Nearshore IT/BPO expert

A specialist Nearshore IT/BPO adviser can help prepare the sale, identify potentially suitable buyers, and compare the terms and risks of offers. Regional knowledge and established connections can help focus the process and reduce avoidable delays. Your financial and legal advisers should assess the transaction documents and obligations in each relevant country.