Just over a week ago I posted the first part of this article. I outlined the importance of absolute professionalism when transacting a business sale; how valuations can be misinterpreted and that money is important but not everything. I’d like to conclude the article with my remaining 5 findings.
5. Sometimes I am seen as the last resort – and that’s OK!
One of my clients told me after the deal that I was their last resort and they were not sure what would have happened if we hadn’t succeeded in selling the business! Of course, ideally, we would have been able to have the right conversation earlier (in fact the earlier the better), but in any case, it’s all about making the most of a situation.
Unfortunately, in other cases there has been a limited amount I can do to achieve the Owner’s expectations as the business has been taken to market previously (sometimes DIY by the Owner; in other cases by another broker). Therefore, even if things were to proceed to a robust sale process it can be very hard to achieve a positive outcome unless there has been substantial positive change recently within the business and for its prospects.
6. It takes more than just “knowing” who the buyer might be.
It’s one thing to have a possible buyer and even a possible deal on the table. However, it’s another thing to get to a completed deal with the confidence of knowing that you got the best deal possible. Often initial approaches are made from potential buyers where, in reality, they know very little about the business (as opposed to a potential purchaser who has been provided with a comprehensive and professional information memorandum upfront before the offer stage). As a result, it can be common for the initial interest to be revised meaning that the price level expected by the Owner does not materialise. Which leads us to…
7. What’s the plan when it becomes “all too hard”?
From my experience, there is always something unexpected that happens in a deal. It’s not always all plain sailing or your first option, then the second option does not produce the goods. Even with best intentions, there are often points or moments in a transaction where the deal threatens to become all too hard for everyone. This might be because of different expectations; information not able to be provided; milestones that need to be achieved or simply changes in circumstances (e.g. loss of key customers by the business or another opportunity comes along for the potential purchaser). In any case, you can expect that circumstances will change throughout the sale process and you need to be able to manage, change and execute well to get the deal done.
Having an independent voice is helpful to rationalise decisions but also progress the discussions between the parties at the right time to keep things moving positively.
And what’s the back-up plan when things don’t go according to plan? E.g. what if your preferred purchaser doesn’t materialise with the majestic offer you thought they might? Is it something that you can negotiate your way through or do you need an alternative approach and perhaps need to consider taking the business to the wider market (stage two, if not stage three)? If you are then taking the business to market, who’s the best person to do that for you and what resources will you need?
8. For many owners, selling is a once in a lifetime event.
As an Owner, you want to get the sale process right, especially as there can be so much of an Owner’s wealth (and legacy!) tied up in a business. With a lot at stake, it pays to be considered and deliberate, as opposed to rash and impulsive, with how you go about the sale process. In other words, it can be expensive to learn on the job.
Not only that, but it’s a significant period of change for Owners. In my experience Owners are often challenged on how they see their business; its value; and the multitude of options that they have to consider throughout the sale process.
Then there is the personal change that will be required from each Owner. What they will do with their time after the sale? What they will do for work/employment – especially when their relationship with their business will change? What will happen with their legacy and who the right party is to take the business forward?
All of these are transition issues that an Owner can’t avoid, but with the right leadership and advice, an Owner can navigate the process successfully and achieve positive outcomes (and get on with life!).
9. Selling a business is a big distraction!
With all of the comments I have made above, it will hardly be a surprise that the selling process is a big distraction for many Owners, even when I have fully managed the process for them. Business doesn’t stop during a sale process – in fact continuing to produce good operating results and keeping key employees engaged is vital to concluding a deal and achieving a top sale price. That’s where there can be significant value in choosing a dedicated specialist proactively leading the sale process for the Owner as opposed to purely using existing advisors behind the scenes (of course I would say that!).
But don’t take my words for it – have a look at the testimonials to read what my clients have said about their respective experiences.
I’d be happy to talk to any Business Owner about getting a great sale outcome so please call me.