It comes a point in time when you have to say enough is enough and this also applies in business. Whether you want to start up a new one given the fact that the vision of the current company has diluted or you simply want to buy an island and retire, there are some crucial aspects you need to know when you are trying to sell your company. In my opinion, this is one of the saddest and strangest feelings you could ever feel. Moreover, it’s the almighty decision that will make or break you, the decision that will impact your entire life from that point on. So let’s cut to the chase and let’s see what you need to know.
When trying to sell a business, the process is not as simple as you might think. In fact, it usually takes way longer than you’d expect and it will be more complicated than you’d ever think. Let’s assume this is your first company and that you’re not familiar with the selling process. In this case, don’t be surprised if you find yourself baffled by questions you weren’t expecting like “How many buyers should I reach out to” and also situations you don’t really know how to interpret such as “This particular buyer’s offer is lower by 20% than that one! What are they trying to do, insult me?!”
Here are seven instances that you weren’t probably expecting:
First of all, during a selling process, the person interested in selling usually gets burned out, so make sure you know the main reason you are doing it. Whether you want to expand the operations of your company or just to take part in a new startup founded by a friend, consider the fact that the whole selling process can last from nine months to a year. Therefore, it’s normal to wind up frustrated along the way. However, your ultimate goal is to sell and that should be your main motivation. This will help you regain focus, i.e. closing the deal.
When it comes to selling a business, this process will require professionals. While you might be inclined to hire an accounting firm just because somebody has showed them down your throat, consider the fact that the selling process happens only once, so make sure you use expert intermediaries who have dealt with similar situations at least several times before. This is not the time to consider a relative or a friend’s friend to take care of it. So no cutting corners. Yes, some money may be saved down the road, but the risk isn’t worth it if you think about it.
At some point during the selling process, you’ll have the feeling that the deal is dead. Some bankers even go as far as stating that “every deal will die three times before it is successfully closed“. Come to think about it, there’s some truth to that statement. At time, both you and your buyer will slam down your phones swearing that there’s no possible way of completing this transaction. While this happens almost in all cases, the good news is that this is normal and it happens more than you might be inclined to think.
Accountants need numbers just as much as they need air to survive. In some instances you might feel overwhelmed by the unending stream of demands regarding the financial information. The funny thing is that these requests will come not only from the investment bankers but also from your accountants, CFO, pretty much everybody. The bad news is that this step of the process is both necessary and unavoidable.
Lawyers have a way of spreading negativity like there is no tomorrow. During the selling process, they always begin every sentence with “The problem is that …”. And what annoys most people that are trying to sell their company is that this negativity becomes discouraging after a short while. Just remember that you’re paying them to guarantee your protection, so it’s their job to continue in their pursuit of finding possible problems. Do everything within your powers to remain positive and keep pushing forward so that you can find the solutions.
Probably, you’re not Google, nor Apple. If the asking price is steeper than the value of the best public company within the industry, you may have unrealistic expectations. Yes, your baby is the smartest and the prettiest and the most valuable baby out there. Just admit to yourself that you can’t stop being biased. In this case, just seek out some other more objective opinions.
Last but not least, while this process will take up most of your company, remember to run your company. This might just be the biggest sale of your life. When and how to sell your “baby” is one of the toughest business decisions a company owner has to make during his or her life.
Once the process gets rolling, you won’t have too much time to manage your company. However, if profits will drop, the value of the company and your negotiating strength will do the same thing. Take the necessary time to make sure the business will run smoothly. This way, the buyers will line up and pay top dollar for a premium company.