The Divestiture Process, Step by Step
by M. Eric Furlow

  1. Have a discussion about valuation and the selling process.
  2. Sign the Consulting Agreement
  3. Prepare a 8-15 sentence “Blind Overview”.  This is to inform buyers of the basics of your business WITHOUT them knowing who you are.
    1. Examples:
      Website Development company, established in 2004, with annual revenues of $210,000. 2006 sales growth was 25%.  Company specializes in custom website development and e-commerce and owns rights to a variety of source code, including market ready applications.  Healthy repeat business and recurring revenue programs. Offices are located in a 2,000 square foot facility, which includes space and facilities for hosting.    
    2. Shared web hosting company with approximately $645,000 of annualized recurring revenues.  Uses Modern Bill and Cpanel control panel.  There are approximately 3,850 accounts.  All Windows.  The company co-locates company owned servers
    3. Linux shared web hosting company, hosting approximately 2,700 accounts with monthly revenues of $32,000, annualizing to $384,000. The company provides a proprietary Control Panel and uses IspEasy for billing. The company owns its own equipment and all servers and equipment are located on site.
    4. 8+ year old ISP with annualized revenues of $3,000,000 and EBITDA of $500,000 all of it generated from industrial and commercial clients in the Los Angeles metropolitan market. It provides T-1s and DSL.  A number of its clients are retail chains, listed on the NYSE and NASDAQ with hundreds of stores throughout the country, in which outlying stores feed their data into the Los Angeles ISP.  Asking price is 5.0x EBITDA.
    5. Dedicated/Managed server hosting company with monthly revenues of approximately $95,000.  Approximately 725 customers.  The majority of servers are Linux with a few Windows boxes.  Servers are owned and are co-located in a data center in NJ.
  4. I will then send the Blind Overview out to 700+- active, or formerly active, buyers of Internet assets around the world
    1. Before you jump and say you do not want this many people to know you are for sale, realize this is a blind overview, none of these people will know your company name. 
    2. Sending the deal to as many buyers as possible is one of the easiest ways to increase the probability of selling for the greatest price and for the best terms.
  5. We create a Company Overview which is created from the information on THIS list.
  6. When a prospective buyer responds to the Blind Overview, I have them sign a Non-Disclosure Agreement … only then do I send them the Company Overview.  You should not worry about 50 buyers signing the NDA just to see who you are.  (I have heard this concern a few times.).
  7. Buyers will have follow-up questions.  In addition, a couple of conference calls, then they will send in a Letter of Intent.

This process can take as little as 2 weeks, or more common 5-8 weeks.