Most successful entrepreneurs are self-driven, self-reliant, and creative. We learn to do things to increase sales and customer counts as well as save money and increase profit, we learn to do things because there is no one else to do them – we are creative and confident. We learn to do things on your own – but just because we can do it yourself, should you? Your business is likely your largest and most valued asset. Is selling your largest asset a “do-it-yourself” project? Selling a business can be very complicated, often involving all aspects of the business – HR, IT, Operations, Finance, Real Estate, Fleet, and so on. Experience in selling your business can literally be the difference between hundreds of thousands or millions of realized dollars. You can benefit greatly from bringing in experts to help you throughout the selling process.
1. Maintaining Confidentiality: This is a basic component of any sale. Maintaining confidentiality is essential when selling your business. If you represent yourself, how will you maintain confidentiality and vet potential buyers without revealing your identity? You can’t. And the more people that know you are selling the more vulnerable your business becomes and the less it will ultimately be worth. It’s critical that your employees, customers or competitors don’t know you’re selling. You need an intermediary between you and the buyer. A representative who is not involved with the business and qualifies potential buyers.
2. Finding the best buyer: Often a business sells to a buyer who approach them – but they might not be your best option. In many cases, these are savvy business owners and experienced Mergers and Acquisition or Business Development executives, looking to buy a business on the cheap. These savvy, experienced, educated buyers want you alone and without representation – inexperienced and vulnerable. Why? It makes you a “soft target”. Having representation levels the playing field and ensures you’re negotiating for an appropriate and premium offer for your company.
3. Focus on running your business: Selling a business takes a LOT of time! Preparing the business properly for sale, marketing presentations, buyer meetings, due diligence, contracts and supporting documents all take time to properly prepare. Dealing with multiple buyers takes time. Meanwhile, you’re trying to run the business and live your life. The average business takes 4-12 months to sell, from preparation to close. Do you really have the extra time to spend days, hours, weeks and months selling your business? While you are doing that, is your business suffering? If your business suffers or goes down during the process, offers will likely go down as well. Buyers want the business to be healthy and growing versus fragile and distracted.
4. Expertise and Experience: Selling a business requires many different types of expertise and skill sets. You need to have good relationships and contacts with potential buyers, a deep understanding of financial statements and how businesses are valued, the legal process involved when a business is sold, what you can do and when to involve an experienced M&A attorney and more. You may have a very good attorney and accountant, but they do not have the same expertise as an experienced business consultant or representative when it comes to selling a business. Business consultants, CPA’s and Attorneys all have very different educations, experiences, rules and ethics when involved in an acquisition. The most lucrative deals are when you assemble a comprehensive team of experts that market, negotiate and sell your business.
5. Unintended Consequences: They have a saying in poker that the best way to conceal your hand is with your face. If you don’t have business acquisition experience (buying AND selling), high level, slow incubation sales experience, then it’s easy to unintentionally give away your hand. The result is that buyers will find opportunities to pay less for your business. The right representative will be very motivated and involved but not emotional about the sale. Since it is a business representative’s job to pursue buyers, earnestly following up on every conversation doesn’t sent the same message it would if coming directly from the seller. Further, buyers will be required to deal with representative you hire.
Mergers and Acquisitions is complex and successful transactions require expertise well beyond what the average business owner has. Your M&A representative will help prepare the business for all aspects of the transaction; they are your experienced resource in all phases. They market you and the business, and they negotiate on your behalf, support due diligence, closing and integration. If you have little or no experience in the process of selling, why try to do it alone? If you are thinking of selling your company and would like a professional, experienced and no cost consultation, call Kemp Anderson Consulting, Inc. at 407-466-5859.