Before hiring an adviser or signing a mandate, the entrepreneur considering a sale should speak with an actual buyer. Not to negotiate, but to understand how the other side of the table thinks.
The entrepreneur who begins considering a sale typically follows a predictable path: first, they speak with their tax adviser or lawyer; then they search online and find a dozen intermediaries; then an intermediary presents a sales mandate with an (often optimistic) valuation.
I suggest a different path. Before hiring anyone, the first step should be talking to someone who has actually bought companies like yours. Not to negotiate or sell. Simply to understand how the other side thinks.
A professional middle-market buyer looks at a company through a specific lens: “How much does this company really earn?” (normalised EBITDA, not reported); “What happens if the founder leaves?” (the most uncomfortable and most important question); “What are the hidden risks?”; “How much can I improve this company?”; and “At what multiple can I buy?”
Understanding these perspectives before starting a formal process is a massive advantage.
An exploratory conversation — without commitment, without exclusivity, without pressure — can provide invaluable perspective. Useful questions include: “What type of company are you looking for?”; “How would you value a company like mine?”; “What problems do you typically find in due diligence?”; “What does the process look like from your side?”; and “What happens with the employees?”
Realistic expectations. The entrepreneur who has talked to a buyer has more realistic price expectations than one who has only spoken with intermediaries.
Better preparation. Knowing what the buyer will examine, the entrepreneur can prepare: clean the accounts, formalise contracts, document processes, reduce founder dependency.
Time savings. Many sale processes fail because incompatible expectations are only discovered after months of work. An early conversation prevents failed processes.
Trust building. If the conversation goes well, it can be the beginning of a relationship that eventually leads to a deal. The best acquisitions we have made at Blue Mountain started as exploratory conversations, months or even years before the transaction.
At Blue Mountain, we regularly receive enquiries from entrepreneurs who simply want to understand their options. It is a conversation we have willingly, with no obligation or cost, because we know that the best deals are born from trust, and trust is built with time.
Dirk Manuel Martens Jimenez Founder, Blue Mountain Capital
By Blue Mountain Capital
By Blue Mountain Capital
By Blue Mountain Capital
If you wish to explore a potential collaboration or present an investment opportunity, we invite you to contact us. We guarantee absolute confidentiality in all our conversations.