Exit Planning Strategies
Selling a Venture Capital Firm
Many business leaders say that now isn't the time to try to sell a venture capital firm. At Gaebler, we think it's a great time to sell a venture capital firm. Here's why . . ..
Dire economic forecasts have forced many venture capital firm sellers into hibernation. Instead of listing their companies now, they're hanging back until they see signs of an economic recovery.
To achieve your goals, you'll need to know the market as well as key business selling techniques. As a business seller, you need to go into the process with the mental goal of presenting your business in the best possible light.
Sale Preparation Timeframes
Preparing a venture capital firm sale takes time. For starters, the financials need to demonstrate a track record of profitability and growth. Next, the business will need to be documented in professional financial statements and manuals that facilitate the ownership transition. Since all of this takes time and effort, a venture capital firm can rarely be ready for the marketplace in less than six months. If you can afford to wait, we recommend investing a few years in improving your business's financial position before you put it on the market.
Selling to a Family Member
The idea of passing a business along to a family member sounds idyllic to many business owners. in reality, a family-based venture capital firm sale can be more complicated than selling to a stranger. If it isn't handled properly, a family sale can quickly create irreparable divisions within your family. Whether you offer the family member special concessions or not, either the buyer or other family members may take offense. If possible, discuss a long-term, generational transition with the entire family and seek the advice of a professional consultant.
When the Sale Goes Off-Course
Many venture capital firm are tempted to save brokerage fees by selling their businesses on their own. But for every successful unassisted sale, several other venture capital firms sell below market value or languish on the market for years without attracting the interest of qualified buyers. As a rule, no business should sit on the market for more than six months without attracting the interest of at least a handful of qualified buyers. Lack of buyer enthusiasm or persistence indicates that something is wrong. The remedy is professional brokerage or a consultation with more experienced sellers.
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