7 Essential Steps to Selling a Florida Software Start-Up
How to Sell a Software Start-Up in Florida
Many Florida software start-ups are founded with the intention of eventually selling them off to a larger company. Mergers and acquisitions are, after all, a driving force in the tech industry, and one of the top M&A fields overall. Regardless of the industry, it takes effort and careful planning to get a business ready to sell, find a buyer, and close the deal. Here’s how Florida tech start-ups can prepare.
1. Deciding on the Best Time
As with many things in life, timing is a critical factor to consider when selling a Florida software start-up. This includes finding the right time to put your company on the market. There are both personal and business perspectives to consider here, such as whether the company is doing well enough to attract buyers, and whether you as an individual are ready to move on to the next big thing.
It’s also essential to give the Florida software start-up enough time to prepare your for the sale as well, so try to start getting ready at least a year or two before you plan on closing. For more information to help you find the right time to sell a Florida software start-up, check out our article on timing a business sale.
2. Get a Valuation for the Florida Software Start-Up
You can’t sell a Florida software start-up – or any other business for that matter – without first understanding what it’s worth. This process is called getting a valuation of a business. There are many different ways to get a valuation for a business, so be sure to pick the method that best matches the Florida software start-up’s needs. A business appraiser can be very helpful in this endeavor.
3. Ready Your Florida Software Start-Up’s Documents & Create a Prospectus
Next, the business must prepare its documents and all the rest of the paperwork needed for the sale. Depending on the size of the Florida software start-up, this could be a significant undertaking, so plan accordingly. This step is essential to proving the company’s worth to interested buyers. You can learn more by reading our article on business sale documentation.
As a starting point, most buyers look for comprehensive financial records for the past three years at a minimum. If the company holds any intellectual property, such as patents or trademarks, then that paperwork should be included as well. Drafting a prospectus could be another way to attract more attention to your company.
4. Review the Start-Up’s Investors and Other Funding Sources
While this step is a good idea for all Florida businesses, including software companies, it’s doubly important for start-ups. Review the terms of any funding agreements to ensure that you have the authority to sell in the first place, and inform your investors of your intentions. They may have a contractual say in the matter. Do this early on, as certain investors (particularly the traditional kind) can draw out the process.
5. Market the Company and Evaluate Buyers
Although software start-ups and other tech businesses remain a hot commodity, it still takes effort to the right buyer. Be sure to shop around, too – don’t just put everything on the first prospect that comes along. This stage can take anywhere from months to years. When searching for your ideal buyer, don’t just look for whoever is offering the most money; it’s important to find someone who’s vision and values match the founder’s own as well.
6. Stay Focused on the Florida Tech Start-Up
Just because a business it up for sale doesn’t mean that the business owner’s work is over. Keep up the forward momentum and keep proceeding as if the sale wasn’t a concern at all. This also involves staying on top of industry trends and developments. Doing so will help ensure that the company keeps building, or at least retains value until it finally changes hands. It also shows buyers that they would be making a secure investment in acquiring the start-up.
7. Final Negotiations and Due Diligence
The final phase of selling a Florida software start-up begins once the ideal buyer has been found and vetted. It involves final negotiations, mutual due diligence, and finalizing the sale. At this stage, it can be helpful to retain an attorney to advocate on your behalf, assist with drafting and/or reviewing the business purchase agreement, and avoid any last-minute complications.
Due diligence on the buyer’s side involves certifying that the business is worth as much as the valuation says it is, which is where all that document preparation from earlier comes into play. At the same time, the seller can take this chance to verify the buyer’s own financial status. Then, after any final adjustments, it’s time to close the deal.
Looking to sell your Florida tech-start up? FL Patel Law, PLLC can help with all stages of preparing a business for sale, regardless of size or industry. Call us at 727-279-5037 or contact us online today.
Have a Question?
