53% of business owners have given little or no attention to their transition plan. Negotiating the sale of a business is a complex and stressful process, but it can be gratifying if done correctly. After all, it’s your reward for a lifetime of work. Selling a business requires careful planning, preparation, and execution to ensure the owner gets the best possible deal. That is largely the responsibility of your deal team. Negotiating the sale is more about managing your own emotions and expectations. The truth is there are two sides to selling a company, the technical side and the emotional side.
Just like the technical side begins with a company valuation, the emotional side also begins with an evaluation.
The Three Whats
- What does a good sale experience look like?
Most business owners focus on the amount of money that they will walk away with when they define a good sale, but in reality, a good sale experience is just as much about factors like understanding the process, taking care of your people, and feeling validated in what you have built as it is about money.
- What will you do next?
As Denise Logan says in her book The Seller’s Journey, “Travel and golf is not a plan.” One of the reasons many business owners pull out of a sale in the final stretch is because they suddenly realize that they have no idea what they are going to do on Monday if they don’t go to work. Building and running a business is part of your lifestyle and it’s important to know what you are going to do after you sell.
- What do you need to do to leave on good terms?
Many business owners feel like their employees are family. In some cases, they actually are family. Its important to consider what you need to do, if anything, to ensure that your family is taken care of. This might mean post sale bonuses, negotiating retention contracts with the buyer, or just holding a Q&A session to make sure your team is comfortable with the changes.
The sale process is not exactly known as a walk in the park. Due diligence, quality of earnings reports, and the endless buyer questions are taxing both physically and mentally. Make sure you are taking the time to check in with your own levels of frustration and calm. When the frustration rise take the time to talk to your advisors, look for opportunities to delegate, and maybe indulge in a lunch away from the office without your phone for 30 minutes.
You’ll make better decisions in the long run and be happier with the results if you can keep a clear head and that comes from recognizing when overwhelm and burnout have set in and taking the time to address them.
The worst way to sell a business is under duress. Forced sales, sale scenarios where the seller either must sell or liquidate, often result in poor sale experiences and many sellers enter the market five to ten years after they probably should have. Take the time to prepare early. Vet your deal team, do a couple of test valuations over a ten-year period just to see where you are at and what your business’ weaknesses may be. Your business will only be better for the knowledge and the extra time will allow you to make better decisions and feel better about the process as a whole.