Sell-Side M&A Process: 6 Tips for Owners for Successful Sale

Marsha Lewis
M&A Science
Published in
6 min readJun 10, 2021


Companies are looking to buy like never before.

Between record amounts of ‘dry powder’ in private equity, capital relatively easy to come by thanks to more quantitative easing, and (for now) near zero interest rates, acquisitions are firmly on the corporate agenda.

If one comes knocking on your company’s door, whether or not you had considered a sale before, it pays to be prepared for a sale.

A sale of a company may be the best way of all to maximize shareholder value. Perhaps the buyer has resources that mean the combined firm will be able to achieve goals that would otherwise be beyond the reach of your company.

Perhaps they’re willing to pay a premium for your company as a result. Whatever the reason, all of the practices involved in making your company ready for sale generate value.

So always be ‘ sale ready ‘.

For sellers that require a checklist of the processes that need to be undertaken before beginning their M&A process, DealRoom has put together an exhaustive list that its clients can access here.

This list includes every step, from creating a sales memorandum right through to your obligations after the transaction has closed, and can be used as a reference whatever industry you happen to operate in.

But let’s take a look at a classical scheme of a sell-side M&A process below:

sell-side M&A process

This scheme could be a bit complicated to understand and it requires having some knowledge about M&A process overall.

Below we will describe the steps of a successful sell-side process in a simpler way. And continue in our future topics.

So let’s dive in.

The sell-side M&A process steps

  1. Create the motive for acquisition
  2. Value your business
  3. Developing a sales memorandum
  4. Hiring an Investment Banker
  5. Negotiating with buyers
  6. Due Diligence

1. Why would somebody want to acquire your business?

In the same way that it is important for buyers of businesses to establish a motive for undertaking M&A, sellers need to establish why another company would be interested in buying their company.

  • Why would they buy your company and not another?
  • Would the motive be strategic or financial?

The financial motive tends to be stronger: as great as the synergies between two companies appears, steady or growing cash flows are hard to beat.

Be honest with yourself when seeking to answer this question, as it will inform the rest of the process.

If you can’t think of any good reason for another business to acquire your own, it may be just a way of telling yourself that it’s not quite as marketable as it needs to be, and just needs some improvements.

Or often it may not be a universally appealing acquisition target but could represent a good deal for somebody in your circle — for example, a manager already working within the business who is capable of taking the reins.

2. Value your business

It is worthwhile to know how much your business is worth to the market before seeking a buyer.

A detailed DCF (discounted cash flow) analysis of your business with conservative growth projections is a good start.

Focus on whether the growth projections look right rather than whether you think the valuation seems attractive. Again, if the valuation is not attractive, it may be that you should wait to actively look for a buyer for your business.

If you’re not interested in conducting (or hiring a company to conduct) a DCF analysis of your company, an easier way is to value the company as a multiple of its profits.

Fast growing companies will warrant a higher multiple than mature companies.

For companies with flat sales, a multiple of three times profit is typical. If you’re valuing your business above this multiple, be sure that you can justify the extra expense for potential buyers.

3. Developing a sales memorandum

The sales memorandum is the marketing document for your business.

When approaching (or being approached by) potential buyers, this document allows you to tell them what they need to know about the business. It should be factual and clearly outline the investment opportunity.

There is every chance that they will have already seen tens of these documents from other businesses for sale, so a well-presented and jargon-free document is an excellent way to gain a head start on the others.

If you don’t have the time or inclination to write this document, you can hire an investment bank or M&A broker to write it for you (see next section).

4. Hiring an Investment Banker

Hiring an investment banker or M&A broker is not a necessary step in selling your business, but it often acts as a catalyst.

Both investment bankers and M&A brokers specialize in acting as intermediaries for companies involved in M&A. This means that they can take you from the very start of the process where they establish your requirements, through to putting together your sales documents, finding potential buyers, negotiating with them on your behalf, and ultimately bringing a transaction to a successful close.

Consider the costs and benefits of an investment banker before hiring them.

Usually, these intermediaries will require a retainer fee in addition to a commission upon the sale of the business.

If you already have a few buyers in mind in your industry, or you know the owners of potentially interested companies personally, it could be worthwhile to contact them before hiring an intermediary.

If you think your buyers may be sourced from further afield — a different state, or even a different country — an intermediary’s industry contacts can be valuable.

5. Negotiating with buyers

The process of negotiating with potential buyers has the tendency of showing investment bankers in their best and worst lights.

At their best, because it helps to have experienced negotiators on your side that have intimate knowledge of the M&A experience; at their worst, because as intermediaries, they’re always looking for their commission.

The fact that the bulk (or all) of their pay comes from the sale of your business means they’ve got an incentive to sell even if you’re not happy with the offer.

However, these are good problems to have as they at least mean you’re at the negotiation stage. Know what you want before you enter negotiations and don’t be afraid about closing negotiations early if they’re not moving in a direction that satisfies you.

Also, decide in advance how flexible you can be on your terms. You will often find that a buyer will (with some justification) want to make part of the payments contingent on other factors (revenue or income growth, for example).

Be prepared to factor this into your negotiations, and how much of the company value you are willing to make contingent to these factors.

6. Due Diligence

Due diligence is as important for the seller as it is for the buyer.

DealRoom has significant experience in helping both sides of transactions with their due diligence process.

In a previous article about sell-side due diligence, we discuss in some detail how business owners on the sell-side can make the most of their due diligence, and use it to their benefit, even if they don’t end up selling.

DealRoom also has a number of templates to help companies through this process, all of which can be insightful for business owners on the sell-side.


In the coming two years, M&A activity is likely to recover and exceed pre-pandemic levels for all company sizes and industries. This has the potential to generate huge amounts of value for the sell-side as much as the buy-side. If a buyer comes knocking on the door for your business, you should be prepared — that means having documents such as sales memorandums, company valuations, and information required for due diligence ready in advance. Talk to DealRoom today about how we can give your company an edge on the sell-side.

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