| You have made the decision to sell your | | | | business sale, and your desire to ring the bell from |
| healthcare information technology company. | | | | your 30 hospital chain deal, what do you do? |
| Maybe it was because your prospects are | | | | You engage a great M&A firm that specializes in |
| selecting the inferior product but superior safety | | | | Healthcare Information Technology companies (I |
| of your brand name competitor. It could be that | | | | know of one if you are interested) to sell your |
| one of the industry giants recently acquired one | | | | business. Let them focus on selling your business |
| of your small but worthy competitors and has | | | | and you focus on running your business and |
| removed the risk component of a buyer's | | | | closing that big sale. Get several buyers interested |
| decision. You may think that you have a limited | | | | and negotiate for your best deal. There will be a |
| window of opportunity for your technology and | | | | lot of give and take here. At the right moment, |
| you should sell it while it still enjoys a competitive | | | | as a counter to one of the buyer's points, you |
| advantage. | | | | ask for a 6-month window post acquisition to |
| These are all good reasons to set your business | | | | close that deal. You then ask, for example, for an |
| sale process in motion. A critical element here is | | | | earn out incentive of 50% of the contracted first |
| time. Good technology not achieving meaningful | | | | year revenues of the hospital deal as "additional |
| market penetration is vulnerable to competition. | | | | transaction value" payable 30 days after the one |
| Given this scenario, the more rapidly you can get | | | | year purchase anniversary date. |
| your acquisition opportunity in front of the viable | | | | There are lots of moving parts here so let me |
| buyers, the better your chance for more | | | | elaborate. The first element is you do not delay |
| favorable sale terms and conditions. | | | | your business sale process. We already |
| All systems go, right? But wait. We have a major | | | | established that it was time critical. Secondly, I |
| proposal out to that 30 hospital chain and when | | | | very carefully chose the language "additional |
| we get that deal our sale price will sky rocket. So | | | | transaction value". We want to make sure that |
| we are just going to wait for that deal to close | | | | this payment is not confused with ordinary |
| and then put our company up for sale. | | | | income at double the long term capital gains tax |
| Let me give you a gem here. We will call it the | | | | rate. Third, you have a way better chance of |
| Moving Sales Pipeline Theorem. It states the sales | | | | closing the big hospital chain as a division of G. E. |
| pipeline always moves to the right. This is based | | | | Healthcare, for example, than as XYZ Diagnostic |
| on over 20 years in technology sales and sales | | | | Software, Inc. Finally, what a great way to kick |
| management experience and many years of | | | | off a relationship than a big collaborative sales win |
| selling companies with sales pipelines. The sales | | | | that makes the buyer look really smart. Your |
| either take much longer than projected or do not | | | | earn out check will be the most enjoyable |
| materialize at all. | | | | payment they can make. |
| Given this, the time critical nature of your pending | | | | |