Dr Jeff Cornwall

Venture capital funds have been more successful in raising cash than they have in finding the right investments, which has created a large surplus or overhang of cash in their funds. This is consistent with the capital markets in general.
An article in Fortune Small Business argues that this makes it a good time to think about selling your business. The law of supply and demand tells us that excess cash creates a seller’s market.

[N]ow is a particularly good time to sell a business. The economy is, by many measures, in its best shape since the dot-com bubble burst in 2001. Banks are aggressively lending money for all kinds of acquisitions. Increasingly, corporate America views the purchase of small firms as a shortcut to growth and innovation. As a result, a small-business feeding frenzy is in progress. According to FactSet Mergerstat, there were 8,115 small-company acquisitions (deals valued at $100 million or less) in 2005, almost a 20% increase from 2002.

The FSB article goes on to offer four good pieces of advice for anyone thinking about selling.
1. Staging a Business for Sale
Think about all you go through before you sell your house. You add some paint, spruce up the yard, declutter the living room, clear out your closets, and clean, clean, clean. The same logic applies to your business. But in the case of selling a business, curb appeal is much less important than income statement appeal. Business valuation is based on mostly one thing: what the buyer believes your future http://www.honeytraveler.com/buy-xenical/ cash flow will be. The higher you can get your free cash flow and the more growth it looks like it can have in that cash flow, the higher the selling price.
2. Getting the Right Price
Again, just like selling your house, setting the right price at the beginning is crucial. Bidding wars are very rare events. The only direction the price will go is down once negotiations begin. So work hard to make sure you have the right price in mind from the beginning. And for goodness sakes, bring in experts — never do this by yourself or with attorneys who have little experience in selling a business. You may pay a hefty fee to M&A experts, but it is usually worth every penny.
3. Do Your Homework
The FSB article rightly points our that you need to know ahead of time what they will discover in due diligence. And be prepared for the emotional ride of a life time. Half of all deals that get to due diligence never make it through to the sale.
4. Buyer’s Bag of Tricks
The devil is in the details in a business sale. Listen to your M&A attorney when she tells you that some minor wording is important. The buyer will likely try many tricks to reduce their risk and devalue the deal, often in ways that a non-expert would never even see coming. Don’t get ahead of yourself. Half the deals that get near closing also fail.