?10 things to ask before… Managing a merger

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1. Is my company in play?

If you are a strong company in your market, you’re in play for an acquisition. Companies higher up the food chain are always looking for good businesses they can purchase.

2. How do I raise my company’s worth?

You should take steps to rid your company of unwanted baggage. Eliminate liens, end outstanding litigation, let go of underperforming employees, conduct audits of your financial statements to ensure they are unblemished, beef up your intellectual property and sell off unneeded assets, including physical inventory and less tangible divisions. Make sure your relationships with customers are strong because those will often travel with the transaction.

3. When do I start the process?

The best time to sell is when you are at the top of your game. Executives should plan years in advance of signing any papers. Though, capital markets also can play a big role — is the economic environment creating the right value for your company? Is your industry particularly hot now?

4. Who should be my advisers?

Good advisers, who have gone through similar M&A deals and have unique insights into your market, can introduce you to potential acquirers and help manage the process. Advisers can include accountants, attorneys, special-ized investment bankers or venture capitalists. Also look for help from groups such as the Association for Corporate Growth.

5. How can I value my company?

This is perhaps the hardest step in the process. One way is to calculate the worth of your assets. Another is to compare your market value with that of a similarly sized company in your industry. Look at past growth rates and potential future cash flow. Is your niche very crowded or does it have high barriers to entry? But in the end, it often comes down to what a buyer is willing to pony up.

6. What are my options?

Your destination need not always be an outright acquisition. Other options include a partnership, licensing deal, equity stake or channel sales distribu-tion. Once you begin negotiations with another company, understand your strategic value to determine the best path for your business.

7. What terms should I choose?

When you sell a business, it’s all about the terms. Sometimes a good sale might result in a lower price, but better terms. Do the math to determine if a cash, stock or asset-based transaction is best. You should be aware of payment terms, management agreements, tax implications, warranties, etc.

8. How do I get to potential buyers?

That frequently happens well before you start thinking about a merger or acquisition. You should be out meeting people at industry events andbuilding strong relationships with potential partners, resellers and suppliers all the time. They may eventually turn into buyers.

9. Am I prepared for the outcome?

That’s often a personal feeling. As an entrepreneur, you can be a significant or small part of the process — or not be involved at all. Never expect your initial plan to be the final plan. If you want to build a business bigger than yourself, sometimes you have to accept you are no longer the big cheese.

10. How do I integrate with another company?

It’s critical to retain your best people, the ones who understand your corporate culture, and perhaps let the others go. Statistics show that 80 percent of acquisitions fail to create value because of integration failure. Focus on the people to make an acquisition work. Integration is not about numbers.