Selling a business can be an emotionally wrought decision for founders. They’ve built a company from the ground up, often pouring much of themselves into the company. Anxiety about the company’s future, about a loss of identity, and more is normal. Retaining a quality business broker is key to a smooth transaction. Additionally, these principles can help the process go more smoothly.
Identify Your Assumptions—and Discuss Them Upfront
You likely have a clear vision for how you want things to look after you leave. Do you envision the exact same company, but run by someone else? Do you hope to remain onboard as a consultant? What is the ideal outcome for this transaction. Be mindful that buyers and advisors may not share these assumptions. Make them explicit, so you can negotiate a deal that meets your economic and emotional needs.
Determine Key Principles
What are the main goals of this transaction? Write them down, and be sure to list non-economic goals. For example, owners sometimes want to sell to reduce stress, or to prove the value of their years of work. They don’t have to necessarily make economic sense, either, since even principles that seem unreasonable can ultimately affect the deal—and your willingness to participate in it. Articulate these principles to your advisory team early, so they can help with finding a buyer and negotiating a deal that is true to these principles.
Choose the Right Advisor
If you've led a successful company, you might believe that you also have the skills necessary to lead a successful transaction. But mergers and acquisitions are vastly different from sales and services. You may not know what type of advisor is necessary, or what duties they fill. Resist the temptation to sign with the first advisor you find, or to let your staff oversee the transaction. An in-house counsel, for example, simply lacks the skill and experience a seasoned M&A attorney has. Instead, work with an outside broker or M&A advisory firm, and seek guidance from them about the additional experts—accountants, lawyers, etc.--the transaction might demand.
Some other tips for getting the most out of an advisory firm include:
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