You know others do it. They must. Of course, you have heard about those who have “successfully” done it. It is actually almost impossible to avoid the public heralding of their “consummate genius” in doing it so well. It is just the headline stuff though, absent the meaty details.
You have only ever heard horror-filled whispers from other people about those who “tried” but failed, in one way or another. Such things are better left not mentioned in polite business circles.
You have discussed with your trusted friends and peers thoughts about wanting to do it – someday. Yet, you haven’t spoken to someone who is actually in the process of doing it.
No, we are not talking about plastic surgery, hair transplants or cheating on your golf score.
We are talking about selling your company for an attractive valuation.
EVERYONE wants to know what is really involved and how to do it well.
That said, let’s get one thing out of the way up front. It may sound like a cliché, but that is because no matter how often it is said, some people still think it does not apply to them.
“You should not attempt to do this by yourself – ever.”
Cardiac surgery, high stakes felony legal defenses and submitting complex international tax filings generally all fall into this same group, too. Yet, there are always people who think the rules of the universe are different for them. Somehow, the laws of business-physics are intentionally and routinely sidestepped by them, and quite rightly so, because they are Anointed Ones. Ha. That would never be you. Right?
Why do we even bring this up? Well, you generally only get one good shot at doing this. There is a massive risk you will be seen as damaged goods by the universe of potential acquirers if you somehow survive not doing it properly. Some things just don’t grow back. Your business reputation and your acquisitional attractiveness are two of those things.
How many other things in your life did you totally ace on the first actual attempt (no matter how much theory you studied ahead of taking the necessary actions)? For real. It’s not what you tell your golfing buddies or your grandkids.
Now, those who mess up this process are not exactly going to admit it to other people. After all, how would that look? Most likely, they won’t even admit it to themselves. Predictably, they won’t admit it to their spouses. They certainly won’t admit it to the people they are always trying to impress.
Adjacent to the land of “Dismal Failure” is the continent of “Sub-optimal Results”.
How much money do you think amateur poker players lose or leave on the table? It is the same thing with selling your company. Amateurs can leave a LOT of money on the table and usually not even know it. Savvy buyers count on this. There are also a myriad of ways things can turn ugly on you and you can lose a chunk of the negotiated and contracted sale proceeds. It can be in ways you never even conceived of, let alone in ways for which you were on the lookout. It is best to have an experienced and good mergers & acquisitions lawyer working with you upfront. Otherwise, you can hope you still have a sizeable pile of cash left for paying that same lawyer afterwards, to help you undo the damage. We highly recommend the former approach.
We are sure you realize you don’t just take out a classified ad in the local paper stating “New ownership sought for ABC Company”. There probably is no faster way to guarantee your business rapidly becomes worth next to nothing.
Why? Consider this. If you were a customer and you saw such an advert for one of your favorite vendors, you would immediately start the selection process for a trusted new vendor. The above (obviously caricatured example) would quickly result in the loss of most or all of the attractive and profitable customer accounts, and effectively tank the business, rendering it near worthless.
The search for a buyer has to be conducted in a confidential manner and at a measured pace. Nothing screams “Fire Sale” more than a Seller’s requirement of a short fuse on the entire sale process.
This leads to thinking ahead and—ideally — engaging the professional team to market and sell your business at least 3-6 months ahead of when you want them to start circulating the public teaser. Hopefully, you have been working towards this for the previous 3-5 years, preparing the books for a clean due diligence package and ensuring that you have been maximizing growth, profitability and performance.
The Anatomy of a Sale
Are we investment bankers with the necessary FINRA and SEC licensing? Are we a licensed Commercial Real Estate or Business Brokerage? No, we are not. We act as executive / management consultants for you throughout preparing for the sale process. We act as your quarterback executing on the play, to use a sports analogy.
Generally, we work with you and your team to get the core due diligence information collected internally. With our full range of experienced C-Suite executive consultants, we have the bandwidth to help you get this done without broadcasting your intentions to even your key employees. We also absorb a lot of the workload so you are not overburdening your senior staff on top of their normal workload of running and growing the business. Without us fulfilling this role, the process can be both highly invasive and overly burdensome. Worse, you can end up taking your eye off of ongoing operations of your business. That’s not what a buyer wants to see.
We also help you select the brokerage group (an experienced one with good reach and expertise) or the investment bankers (likely a boutique one with great reach and distribution) that are best positioned to conduct your sale. Some firms are dual licensed and can handle whatever the type of sale upon which it is the seller and buyer agree (asset sale versus stock sale).
Do you have to pay us in addition to the brokerage/investment banks fees? Properly executed, our executive consulting fees — along with the brokerage/i-bank commissions — will add up to the same amount you would have paid in just brokerage/i-bank in commissions if you engaged them directly without us. We bring them the opportunity and handle much of the upfront heavy lifting of assembling the due diligence information, so they can focus on creating the Confidential Information Memorandum (based upon the due diligence information) and the target buyer distribution list, along with warming up the potential recipients about an attractive opportunity getting ready to come their way for consideration. This form of collaboration is the most efficient one for all parties.
While we charge consulting fees rather than commissions, we can charge a minimum monthly retainer and then not invoice you the balance until the close of the escrow process and we accept these remaining funds directly from the sale proceeds (usually handled by your mergers & acquisition attorneys).
Achieving The Outcome
While you naturally claim you want this sale process to work and you really only have one clean shot at it, how badly do you really want it to work? Are you willing to hand over some level of control? Are you willing to not just listen to the experts but also promptly act on what they advise?
Recall our earlier comparison about cardiac surgery, high stakes felony legal defense and complex international tax filings? Ask highly accomplished professionals in these fields and you will uncover horror stories about clients who still insisted they (as rank amateurs) knew better than the highly trained and experienced professionals. Their stories did not end well. Who would have guessed?
Do you want the process to work because of you, or in spite of you? This does not mean you will successfully sell your business either way. It means the process will work either way but with different outcomes. One will end successfully (at the better end of expectations given the current market conditions). The other will end in either a suboptimal result or a dismal failure. It’s your choice.
Which of these will showcase you in the best light and results in the most comfortable and secure financial outcome and retirement? Call when you need a thinking partner for your business decision.
Peter Gray brings years of comprehensive operational management experience to our clients seeking guidance and surefire methods for top operational performance. He helps business executives to develop and grow their businesses by offering expert ways to implement their operations, finance, growth and product management. He helps companies to integrate innovative methods and strategies so they function effectively.