Part and parcel to this exploration is deciding whether or not to hire an investment banker to help you. And then, which one to choose.
But first, a word of caution.
It is a truism among old-time investment bankers to not take on clients who "need them," The idea being that if a business owner is not capable of selling their business on their own, the business is probably unsellable.
For starters, you and your team need to have an understanding of key business sale concepts like valuation and discounted cash flow. You need to understand and articulate how your industry and market are evolving and how your business fits into this changing landscape.
Until you are able to do this, don't even attempt to sell your business.
With this important caveat, here are three battle-tested strategies for how to hire an investment banker:
1. Buy individuals, not firms. Iinformation technology and social media have leveled the playing field between big and small investment banking firms.
These days, everyone -- from Goldman Sachs and Morgan Stanley to the one and two person shops -- have access to the same deal and industry databases needed to build a "Sell Book" and deal distribution list.
As importantly, social media tools -- yes LinkedIn, but also industry-specific ones like Axial and BizBuySell -- provide the ability to connect with almost any buyer anywhere.
Because of these new realities, when choosing an investment banker, it is more important to evaluate the specific individuals who will be working on your deal, rather than the firms at which they work.
This evaluation should go beyond checking references. Consider your one-on-one chemistry and camaraderie. Also important is your communication styles. Do you like to work face-to-face, at off hours, only through scheduled meetings?
2. Build "outs" into the engagement letter. No matter how well one tries to evaluate an investment banker, nothing compares to actually undertaking a business sale process with them.
Be sure to negotiate an "out" into the engagement letter, so that you have the right to terminate the relationship at any time with no, or at the least, a limited "tail" compensation required.
Investment bankers usually resent this type of request, but if they aren't willing to cooperate, move on.
Remember: They are professional negotiators. If they're unwilling to agree to this, they probably are not as confident in their ability to get a deal done as they let on.
3. Insist on weekly activity reports. Most bankers struggle to regularly and accurately track their hours. Making them do so will help keep your deal more top of mind. Insist your banker provide you with a weekly report of activities performed on your behalf, and the number of hours required to complete them.
In short, in hiring and working with an investment banker to help you sell your business, don't check your common and good business sense at the door.
As the old adage goes -- "Trust but verify." And always leave yourself an easy way out if things start to not go as planned.