Selling your business is, for most owners, a once-in-lifetime event. After many years of hard work and personal investment, you now have the opportunity to monetize your efforts, secure your retirement, set up your estate for future generations and buy that beach home you’ve been waiting for. But deciding to sell your business and getting to the closing table are two different things. It’s important to anticipate the emotional highs and lows that take place during the transaction process.
Yes, there are going to be some great highs during the sale:
· Hanging up after the intro call with a buyer and you just know they’re the one.
· The day you’re presented with 5 different offers for your business… wow! Five offers!
· The afternoon you walk out of your attorney’s office, papers signed and wires sent. It’s official!
These are all great and exciting times in a transaction. But what about the challenging and frustrating parts of the process?
Typically, the beginning of the transaction is easy on the seller. There isn’t much heavy lifting as the banker is doing the marketing outflow, qualifying buyers and initial Q&A. But once you select a buyer and go under contract, the heavy lifting of due diligence begins. There is no sugar coating due diligence – it can be likened to a root canal. It’s pulling together hundreds of documents in a short two to three week window. It’s list after list of requests and questions from various third party advisors to the buyer. You think you’re done and more questions come. It can get frustrating and exhausting - particularly when you’re running your business at the same time and trying to find time to handle the requests.
Then, once diligence is complete, it immediately flips over to the work of legal doc negotiating. If due diligence is a root canal, working through legal docs is an unending tug of war! Lots of legalese, a thousand ‘what ifs’ to be memorialized and you’re questioning whether this work is worth it. As both teams work to create legal docs that are fair and agreeable, emotions can be volatile. You can’t change your emotions, but you can prepare for them.
Recognize this is an emotional process. You’re not just selling an old lawn mower, it’s the business you started and grew for the past 25 years. It’s your 3rd child! And you want to make sure your baby is well taken care of. We realize that for most sellers, this process is new and uncertain. And you have to do it while continuing to operate a successful business. It’s a second job.
Since a business sale isn’t your area of expertise, it's valuable to rely on a trusted team of advisors – accounting, tax, legal and M&A to help you walk through the process. They can help you understand what deal terms and conditions are market versus overreaching requests. They can translate the legalese into language you understand. They’ll help you identify the level of risk outlined in the documents. There will be days you want to quit the process because you don’t think you can get there. You think the gap is too wide between what you want and what the buyer wants. We’ve seen it before. But when both sides work to come to a fair transaction, compromise wins and the agreements come together.
It’s normal to feel emotions through the process. But make sure your emotions don't derail the process. You want to make sure you’re protected legally. You want to ensure your employees feel good about the new owners. You want your customers well taken care of. As you work through the process, trust that your M&A team will shepherd you through the transaction and support you when it gets hard. Leaning on your team and asking your questions (“Is this a normal request?” “What does this really mean to me?”) increases the likelihood you’ll complete a successful transaction and stay steady through the highs and lows that all sellers experience.