Q: What should entrepreneurs consider before they begin the sale process?
A: Think about timing. If something is about to happen that will increase the value of your company, then hold off. And consider your objectives. Do you want the highest price or the right to retain a stake in the company? Do you care if key employees stay on?
Q: How should you evaluate the valuation?
A: Advisers usually give you a range of what we think the business will sell for. If you don't like the bottom end of the range, don't even get started. You're often selling to competitors. If you begin the process and decide not to do a deal, they'll have learned a lot about your company.
Q: What should entrepreneurs remember during the negotiations?
A: Don't overpromise. It takes six months to finalize a sale, so you need two quarters of projections. You don't want to be in the middle of negotiations and have to explain why first-quarter projections were missed.