1. Understand who is interested in you and why.
What are investors looking for? Who would be the ideal acquirer in the market?
2. Don't base your valuation solely on market rules.
While market rules exist—currently between 6 & 7 times ARR, with a profitability premium, for example—they aren't everything. You, your team, and your technological assets are the true value.
Keep this in mind, ensure you retain your key HR profiles, and sell a team, beyond just your technology.
3. Ensure your IP remains your property.
The more you dilute your IP, the more value you lose. Pay attention to your employment contracts; include intellectual property clauses to ensure everything is locked down. These contracts will be scrutinized during due diligence, so it's important to consider this.
4. Cultivate the trend of your KPIs.
For business KPIs, more important than the figures at a given moment are the trends:
Decreasing acquisition cost, consistent growth, decreasing churn rate, etc.
In short, all indicators that show your business is dynamic.
5. Maintain maximum control over your financial independence.
"Raising funds just to raise funds is never a good idea."
The more complex your cap table, the greater the risk of misalignment among shareholders, and the longer negotiations will drag on, with the potential to derail the deal.
Getting support for an M&A process is a key success factor.
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