Selling Your Company: 7 Things You Need to Know
Selling your company is not simple. It will take longer than you think, and it will be more complicated than you think. And if you’re not familiar with the process, you’re going to be baffled by questions you hadn’t anticipated - how many buyers am I supposed to reach out to? - and situations you don’t know how to interpret - this buyer’s offer is 20% lower than that one! Are they trying to insult me?
Here are seven scenarios that you might not be expecting - and the reasons that they’re not the end of the world.
- You’ll get burned out, so know why you’re selling. Why are you choosing to sell now? Maybe it’s because you want to grow the company to 300 stores, or join a friend in a new start-up, or walk the Great Wall of China. The sales process usually takes from nine months to a year, so it’s normal to get frustrated partway through. Keeping your motivation clear will help you stay focused on the ultimate goal.
- This isn’t your specialty, so hire professionals. Selling is a specialized process. It’s not a good idea to hire an accounting firm just because your golf buddy recommended it, or to use your family lawyer to negotiate the sale of your business. You’ll only sell your company once, and you owe it to yourself to use expert intermediaries who have done this many times before.
- You’ll think the deal is dead. My partner likes to joke, “Every deal dies three times before it successfully closes.” There’s a grain of truth to that. At points, you and the buyer will slam down your phones or stalk out of the conference room, swearing on your respective grandmothers’ graves that there is no possible way to do a transaction together. Believe it or not, this is normal.
- Accountants need numbers to survive. You will be overwhelmed by an unending stream of demands for more and more financial information, not just from the buyer but from your representation, your accountants, your CFO, and probably the neighbor’s dog. Unfortunately, this is a necessary part of the process.
- Lawyers start every sentence with, “The problem is…” This negativity naturally becomes discouraging after a few weeks or months. Remember, you’re paying them to protect you, so they’re supposed to keep finding possible problems. Your job is to stay positive and keep pushing towards the solutions.
- You’re not IBM. If your asking price is more than the value of the best public company in the industry, you may be a little unrealistic. I know, I know, your baby is prettier and smarter and more valuable than anyone else’s. Recognize that you can’t help but be biased, and seek out other, more objective opinions.
- Don’t forget to run your company! This is the biggest sale of your lifetime. It’s quite likely that the most important business decision you ever make will be when and how to sell your company. Once it gets rolling, the sales process will seem to suck up all your time and energy, and you’re going to want to focus on it. But if profits drop, so will the value of the company and your negotiating strength. Take the time to keep the business running smoothly. That’ll make your company the kind of growing enterprise for which buyers will pay a premium.