A small business owner shakes hands with a woman attorney following agreement on a acquisition deal.
An acquisition is a major step that will affect your business — and your employees — at all levels. — Getty Images/Charday Penn

The decision to sell your business is a significant one that comes with important preparation for those involved. Executing a smooth transition goes beyond getting your finances in order and filing paperwork. Here’s everything you need to do to create a successful acquisition for your company.

Consider your options

Selling your small business can be an overwhelming endeavor, but knowing your options and understanding that it isn’t a one-size-fits-all contract can alleviate some of the stress. There are different types of acquisitions depending on the company type, the relationship you have with the acquirer, and the transaction type.

Three common arrangements include a full acquisition, a partnership acquisition, and a joint venture.

  • If your goal is to sell the entirety of your company to a buyer, a full acquisition could be an optimal opportunity. In this instance, after the deal is complete, you will have no business participation and 100% of the responsibility lies with the buyer.
  • If you desire involvement, whether large or small, a partnership acquisition may be the ideal contract, as you can negotiate percentages.
  • If you’re seeking a 50-50 split, you might consider a joint venture as an option.

Regardless of which option you choose, it’s important to first determine your selling intentions, what you’re hoping to gain, and what you want your level of involvement to be. Then, thoroughly research the available options. While some directions may be more legally complex, the right preparation and planning can help ensure success in a suitable option.

[Read More: How to Get a Loan to Buy an Existing Business]

Establishing goals and processes

Zawadi Bryant, whose former company Night Lite Pediatrics was acquired by Mednax, says it’s important to understand your reason for seeking an acquisition deal before you begin any negotiations.

“Your 'why' will provide a reason to stay focused on the big picture and not get derailed by the small stuff,” said Bryant who’s now a health equity advocate. “Don't dream about the month-long vacation on the French Riviera. If you need to walk away from the deal, your heart and mind won't be committed to popping champagne bottles.”

She also noted that a small business seeking a buyer shouldn’t be completely dependent on the owner to make decisions.

“We established processes and systems and a management team that operates the business with little oversight from me,” Bryant said. “It was an investment of time and money to build a strong management team and infrastructure, but [it was] a necessity to get us to this point.”

[Read more: What Is a SPAC? What Small Businesses Should Know]

When a company is acquired ... [the] small business owner doesn't control it anymore and things can change — and they usually do.

Brent Williams, founder of Dental Select

Preparing your small business for an acquisition

If you’re about to be acquired, there are a few important things to do before, during, and after the negotiation and closing process to prepare your company.

Before acquisition

Prior to acquisition, it’s important to make your business as buyer-ready as possible, said Bryant. She recommended taking the following actions:

  • Improve the areas of your business that are most valuable to a buyer.
  • Know your valuation range and get a third-party assessment of your preparedness for due diligence.
  • Establish an advisory board and a transition team (an M&A attorney, an investment banker/broker, a CPA, and a financial adviser).
  • Enlist your management team to help you keep the company running smoothly and performing at its best during due diligence.

Brent Williams, who sold his former company Dental Select to Ameritas Life Insurance Corp, also emphasized the importance of preparing your finances for buyer review, especially your profit and loss (P&L) statement, revenue numbers, and the earnings before interest, taxes, depreciation, and amortization (EBITDA) number.

Once a potential buyer has been identified, schedule a meeting or phone call between the two parties. Ensure the potential buyer is a good fit and their vision aligns with yours. Don’t forget to draft a nondisclosure agreement (NDA) agreement prior to the meeting. Those interested in an acquisition will have access to potentially sensitive information, and an NDA will protect against the sharing of private company details.

Keep in mind that the majority of information sharing will take place later on in the acquisition process during the due diligence stage. Having a reference ahead of time for the documents needed can aid in preventing possible delays.

It is also not uncommon for the seller to host an office visit for interested parties. This typically involves personal introductions with company higher-ups, along with a facility tour, and can include a meeting where additional company information is disclosed. This step can come after a formal indication of interest has been received and buyer budgets have been shared.

[Read more: 6 Winning (and Adaptable) Customer Acquisition Strategies From Growing Brands]

During the negotiation and due diligence process

Once an offer has been made on your company, Bryant advised keeping the sales process confidential and closely kept between as few people as possible, since the details aren’t final and the sale could still fall through. She also recommended establishing frequent checkpoint meetings with key stakeholders to keep the process moving.

“Time is a deal killer,” she said.

It is important to note that there will be deadlines for providing paperwork to the buyer during the due diligence process. Preparing for this ahead of time by having documents and data ready can help ensure the acquisition continues smoothly. Employ the necessary assistance to maintain the momentum but also expect potential delays or roadblocks during the proceeding.

The due diligence phase is crucial for both buyer and seller to comb through every document and finalize the details and negotiations. While this stage of acquisition may take the longest, ensuring all legalities are properly handled is well worth the labor.

Once this stage is complete, a purchase agreement will be drafted, edited, and finalized by both parties. Because the purchase agreement edits are handled by each party’s attorneys, the process may take weeks. Prepare for legal fees during the negotiation and finalization stage.

The last phase in the acquisition process is the transfer of finances and liability. The buyer acquires the agreed-upon ownership percentage, whether full or partial, and the deal is completed.

After the deal closes

When the deal is finalized, make the announcement a celebratory event for your team, and provide clear, consistent, and frequent communication during the integration process, said Bryant. Here are a few things to address with your team:

  • Check-in with your employees. “The transition may cause some anxiety and sense of loss for some employees,” explained Bryant. “Do not downplay how employees are feeling.” If possible, meet with each team separately. Address concerns and questions while demonstrating an appropriate amount of transparency.
  • Clearly outline the changes and the positives. “Highlight all the things that will stay the same and minimize and manage the things that are changing,” she said. “Outline the positives to your team and explain what's in it for them.” Having an open line of communication and setting clear expectations can help mitigate potential frustrations.
  • Establish milestones for the integration process. “You want to move on to a new normal as soon as possible,” Bryant said. Providing dates for upcoming changes and ushering in a sense of normalcy with each milestone will help employees adapt to the changing environment, but it’s crucial to make adjustments within the first 100 days of acquisition.

Williams noted that executive buy-in is especially critical to a smooth transition process.

“If [your leadership team] doesn’t benefit in some way, then to them, it’s just fear of the unknown,” said Williams. “When a company is acquired … [the] small business owner doesn’t control it anymore and things can change — and they usually do. So you have to overcome that fear.”

[Read more: Buying an Existing Business? Here’s How to Finance Your Purchase]

What’s next? How to prepare yourself as a founder

Whether you’re planning to stay on or exit the company after the acquisition is finalized, the big question every small business owner needs to ask themselves is what comes next?

Founders like Bryant who stay on with the buying company need to prepare themselves for a different type of leadership role than they’re used to. The best way to do this is to spend time with the company’s leadership team and ask the right questions to establish expectations for both parties.

“Prepare yourself to be a member of a leadership team and not the leader,” Bryant told CO—. “Get all commitments and promises in writing so you are starting off on the same page. Depending on the terms of your deal, you may be employed with the company for a period of time. Doing your own due diligence will make your time at the company much more successful.”

Entrepreneurs who are leaving their companies should think about their next move ahead of time and not look back, said Williams. Letting go of the business you built will be difficult, and it helps to have something new to focus on once you officially leave your role with the business.

“My company was part of my identity,” said Williams. “You feel a sense of loss … [and] I wasn’t prepared for that. You have to replace that with something else.”

This story was originally written by Nicole Fallon.

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

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