Among all the presentations at the event The Internet Is Yours held last Friday in Madrid, we wanted to highlight that of François Derbaix, an entrepreneur with a proven track record What sold Toprural recently, after 12 years of activity. François spoke about how to sell (or not) your company, detracting from the drama of selling a startup: “It's worth thinking that we are not going to retire in the project we have set up. It's very difficult to get a company to compete for many years while maintaining independence,” he said.
In his talk, Derbaix reviewed the three fundamental phases of a sales process: the beginning, the moment when it was decided to start negotiating, and the negotiation itself. Here, we break down the three phases with several tips that the Belgian gives to entrepreneurs:
The beginnings
- Derbaix points out that we must know, at all times, Who are your potential buyers. He recognizes that Toprural was not very clear at the beginning, but that at the time of sale his sector was already consolidated, with clearly identified potential buyers.
- Get to know your competitors personally is one of the interesting points for Derbaix. He even advises traveling to get to know them.
- The former Toprural advocates for Include the drag clause in the membership agreement. The drag clause obliges the other partners to accept the sale of the company if the majority of them have reached an agreement with a buyer. If there is no such clause, either partner can stop the sale.
- Auditing accounts on a Big5 (one of the five major auditors: PwC, Deloitte, E&Y, KMPG or BDO). Derbaix believes that this will give confidence to the potential buyer.
When to sell?
According to Derbaix, The good time to sell is when your company is worth more to a buyer than to shareholders, even if the company is very young. “There are a lot of businesses that haven't been sold, and a lot of opportunities don't come back,” Derbaix says. Toprural sold after 12 years, but Derbaix recognizes having had the opportunity to sell it for more money on a previous occasion.
Sales process
- With a broker or without a broker? Derbaix relies on the middleman if there is a 'hot market', with several competing buyers. Without an intermediary, if this does not significantly speed up the process.
- “If you want to sell, ask for a low price”, advises Derbaix. According to him, it's better to sell cheaply than not to sell, and ending up not selling is very common.
- The Belgian sees it essential to have a good lawyer, since, he warns, negotiating the contract is more difficult than negotiating the price.
- “Don't lie”. The credibility of the entrepreneur is, according to Derbaix, their main asset.
- Of course, Derbaix also states that Secrecy is the best ally of the entrepreneur who wants to sell: “Maintain confidentiality during negotiations. If you tell a lot of people and the operation doesn't go through, you'll look like a loser,” he says.
- Finally, Derbaix advises caution. “A sale isn't made until the money is in your account”, warns. “Don't even make changes to your company suggested by the buyer until the transaction is confirmed.”
