Just over a year ago, the company I started alongside my co-founder was acquired. This was both a short and long time coming: Any entrepreneur worth their salt will always be on the lookout for a valuable exit opportunity, but rarely do these opportunities evolve into something concrete.

While my co-founder and I had been in discussions with the company that acquired us for years, there was still an incredible learning curve when it came to navigating the acquisition process. Despite almost always being on our radar, the acquisition highlighted both new challenges and opportunities for our company. Small businesses, in particular, face a unique set of challenges around an acquisition—especially when the potential parent company is much larger.

Every company is for sale, always.

One of my company’s board members once told me, “A CEO has two main jobs: raise money and sell the company.” What changes over time are the opportunities for exit and whether there’s a match between those opportunities and your goals. For most of the life of a company, you’re looking for that alignment and it isn’t there because it’s rare.

That alignment can evolve, too, developing years later even if it wasn’t there the first time around. The company that acquired my company manages casinos and racetracks. At first blush, there wasn’t that synergy we were after. As conversations continued, though, we were able to identify mutually beneficial opportunities in the digital space. Now, my company helps them diversify its business and expand customer reach for its land-based casinos.

To me, it’s a mistake to not think of yourself as acquisition-minded, no matter where you are in the business development cycle. Entrepreneurs should always be open to the idea and be willing to hear from any and all potential buyers, despite how they may look on paper.

Prepare, prepare, prepare.

Being open to an acquisition is one thing, but being thoroughly prepared is another. I recommend having audited financials even if you’re not required to have them, as well as solid employment agreements with everyone who works for you. You should also know where all your formation, legal and other important documents, are and make those readily available.

Like the old adage goes: Failing to plan is planning to fail. I give major credit to my team for keeping us organized as our company evolved and grew, making what could be a stressful, complicated task an easy one.

Consider good (and bad) intentions.

The devil is in the details, and the due diligence process has a lot of details. My philosophy is always to assume good intent on the part of your acquirer—and bad intent on the part of their attorneys and representatives. This is the typical way things proceed, and I’ve been lucky enough not to be surprised.

Another piece of helpful advice I received was “Never let the other side think they are your only option—even if they are.” Combining this approach with my philosophy on intent helped us remain steadfast in our expectations—without wavering—no matter how many (or few) prospects we had.

It’s also critical for entrepreneurs to have their own lawyers involved at an early stage of the acquisition process. Much earlier than you might think. Full transparency: It’s a major expense, so your instinct may be to wait until the last minute, but it’s too important to put off. Your company’s attorney represents the interests of the company, not your personal interests. The post-acquisition terms of your employment, compensation and many other issues will need to be memorialized. You want your own personal attorney for that. Entrepreneurs need someone who is negotiating from their (and any other equity holding employees’) point of view.

Our second year since the acquisition has officially begun, and I’m eager to see how our two companies continue to grow together.

Resource : https://www.forbes.com/sites/forbestechcouncil/2023/02/15/three-things-small-business-owners-should-consider-when-looking-for-an-acquisition/?sh=5b81f0be7383