To Sell My Tech Company for Top Dollar Takes a Lot of Work

BY David Rowat

Many entrepreneurs say this. It is a reality that when you sell your company it takes a lot of work. This can be exhausting and stress inducing. However, there are ways to minimize stress and maximize the sale price.

Minimize Stress and Maximize the Sale Price by Starting Early

To sell your tech company for the most money with a minimum of stress means starting early – months before you start the exit process.

Most of the work involves creating and assembling hordes of documents, which can be pretty boring. For that reason, it’s helpful to hire an introverted perfectionist a few months ahead of the planned exit who will leave no stone unturned until every document is found and put in its right place.

But many tech company business owners aren’t aware of how much work there is until they launch the exit. That’s when they start the documentation and then discover discrepancies and oversights which delay the exit. In the worst case, the problems may be serious enough to crater the exit. So start the exit preparations early and discover the problems when they are small and can be fixed.

There is even a better reason to have your ducks all in a row. When the documentation is complete, the exit can start any time, which puts the control of exit timing with the founders. Often, a prospective buyer can make an unexpected and unsolicited offer to buy the company. This sounds wonderful, but you then enter a negotiation with a single buyer and no time to develop alternatives. Far better to have the availability to attract other potential buyers with a well-prepared due diligence room.

How to Optimally Categorize Documentation

There is no getting around the challenge of assembling and creating the documentation. Thankfully, not all of the work has to be done at once. In this presentation, I have broken the tasks into three types:

Category 1: Those you can do once, then file and forget about it.

Category 2: Documentation you can keep up to date simply.

Category 3: Some documentation you can only do at exit time.

By packaging the tasks in these categories, preparing the diligence becomes a methodical rather than an insurmountable task.

Each buyer will have their own list of diligence documents to review. There will be requests for documents you didn’t anticipate and/or don’t have, and some that they don’t ask for. That’s fine. It may be worthwhile to disclose the additional documents anyway, which reinforces a culture of transparency which is reassuring to the buyers.

How Do I Sell My Tech Company?

If you ask: “How do I sell my tech company”, a big part of the answer is starting months in advance.  Watch the video for details on which documents to assemble and where in the sale process to do it.  Following the steps will make a seeming arduous task more manageable.

Graphite Financial is a full-service accounting and financial services provider for start-up tech companies.  They are affiliated with KiwiTech, an integrated ecosystem which provides 360 degree support to early to growth-stage startups around the globe. It provides a wide range of technology services for startups of which Graphite is an important component.  I was pleased to provide the experience that Strategic Exits Partners has learned about the exit process. 

The video accompanying this blog was abridged slightly to focus specifically on the United States.  The other video in the Exits Preparation blog includes additional material.   In the video, I go through step-by-step how to identify and categorize the diligence documentation.

Hopefully, this will enable your technology company to be ready to launch an exits or respond to an unsolicited offer.  In so doing, the exit will be more of an orchestrated series of events than a scramble to keep up.