Do Your Homework

 
 
By eweek  |  Posted 2006-07-24 Email Print this article Print
 
 
 
 
 
 
 

Before selling the business, solution providers should do some necessary preparation.

In June, as much of the world took a breather to watch World Cup matches, another sport was getting a lot of attention in the North American IT channel—mergers and acquisitions. Countless owners were pondering, evaluating, negotiating or shaking hands on deals to sell their companies.

M&A activity has been increasing over the past 12 months in the channel for many reasons. Typically, channel companies make acquisitions or agree to mergers to widen their geographic range and boost technical expertise. But also driving the current flurry of M&As is the move toward managed services and a more intense focus on services in general by channel companies.

The reasons for selling are varied. A desire to cash in or retire is often behind a decision to sell. For Greg Talburt, who recently sold his Nashville, Tenn., company—Automated Accounting Associates—it was a matter of geography. Talburt and his family relocated, and he found it too difficult to run the business from afar.

Before selling, Talburt, who appears in this months cover story, communicated his intentions to his clients and made sure they would be OK with the buyer. It was a wise move. After all, customer relationships are the most significant value a solution provider can transfer to a new owner.

Also important when selling is taking the right steps to keep partnerships with other service providers and vendors intact and to prevent employees who are worried about change from jumping ship. Having well-crafted contracts is a good way to ensure employee and partnership retention.

Sellers also must be realistic about the asking price. Owners must have a good handle on what the business is worth and ask for bids accordingly, or they risk scaring off attractive suitors. Selling a business, especially one that has taken lots of energy to build, can be a gut-wrenching decision for an owner. But once the decision is made, owners should make sure that they are as thoughtful about choosing a buyer as Greg Talburt was.

Pedro Pereira is editor of eWeek Strategic Partner and contributing editor to The Channel Insider. He can be reached at ppereira@ziffdavis.com.

 
 
 
 
 
 
 
 
 
 
 

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