When selling your company, you can avoid the top deal stressors by being better prepared
Businesses have been getting bought and sold for thousands of years. But how is it that many company owners/CEO’s are still caught off guard by the complexities of the sale event and as a result, experience a very high degree of unhealthy stress. There is a degree of stress with any transaction, but the degree can be greatly reduced with the proper prior planning. Here are the primary issues that cause sellers unnecessary stress when trying to sell their company:
- In the zeal to want to sell, the time is not invested upfront to get a well negotiated and documented Letter of Intent in place with the acquirer. Kicking the can down the road on negotiating key business points related to the transaction will absolutely raise stress levels as the process evolves.
- Not knowing what you want to do with your life once you sell the company. Some sellers are very clear and excited to move on from their company. But there are many where they and the business are one and separation will be difficult and stressful if not given the proper advance planning.
- Not knowing how your monthly cash flow or healthcare needs will be met post transaction. Sellers can forget that they will no longer receive an automatic payroll deposit each month and they won’t have access to company healthcare benefits and this reality hits during the due diligence phase with an acquirer.
- Being surprised by the acquirer’s depth and breadth of due diligence. We refer to the acquirer’s due diligence process as a proctology exam. Every seller should be prepared for this probe and not be surprised by the depth and breadth of the acquirer diligence.
- Not including a spouse, partner or key family members early enough in the exit planning. Your stress becomes high when you bring them in late to the exit planning process because of the reaction you receive and then of course you’ve introduced unnecessary stress into their lives as well.
- Being surprised by how your employees or customers respond to hearing of the company being sold. Smart acquirers will evaluate this prior to buying your company so you should be well on top of this long before they assess this potential risk.
- Not being prepared for the voice of the customer your acquirer will most likely want to conduct prior to completing the transaction. Sellers are often surprised to learn that a potential acquirer will want to talk with selected customers/clients prior to the deal closing. This is a normal exit process step and there should be no stressful surprise from it.
- Being negatively surprised by the net amount received from the transaction despite the gross amount being attractive to you. Every seller should prepare a Gross to Net Proceeds analysis for a potential transaction. There should be zero surprise what net amount you will receive from the gross amount paid by the acquirer.
Using time as a friend in preparing yourself and your business for a successful future exit will greatly help to reduce unnecessary stress associated with selling a company. The vast majority of what you will experience and what you will be thinking and deciding on through the sale process should not be a surprise. Get external help from those who understand the process so you don’t have preparation gaps that make what should be one of the most exciting and proud moments of your professional career, one filled with unnecessary stress.
