4 Points to Remember for that Fateful First Buyer Visit
You finally made your decision. After all these years, you’re going to sell your company. You agonized; you changed your mind a million times; you consulted with your family; you sought the advice of your lawyer and accountant; and you decided – this is it! You may or may not have had the wisdom to retain me as your M&A coach but you did assemble a deal team. You put out many Teasers and several Books, none of which mentioned an asking price of course. Most recipients declined for one reason or another, but a few were interested and they scheduled visits. Hopefully, you screened them by insisting on an “indication of interest”, a value concept that’s non-binding but has enough information for the both of you to decide if a visit really makes sense. Are they in the ballpark? You decide they are and before you know it, your first visit is scheduled.
If you haven’t grappled with it yet, now is the time to decide whether or not to tell your employees what’s going on. Most business owners dread this day more than any other. “Many of them have been with me for so many years. They will be shocked and devastated.” “They will leave.” They will tell everyone they know.” “Our competition will find out.” “Our customers will find out.” These are all real concerns but in my experience, it is best to tell them early on. You need their help and cooperation. You do not necessarily have to tell all your people but key management should know. Typically, they will not be surprised. Often you’re of retirement age and, whether you know it or not, your behavior has already given it away. There comes a time. When you tell them, say that you have hired a professional team of advisors to help you, and that everything will be orderly. There are no guarantees in life but you will do whatever you can to preserve their jobs. You will be there for a transition period after the sale. You really need their help and you may even offer “retention bonuses” so they stay around. After you have told them, life will be easier. I promise.
Now, about that visit ……. .
CLEAN UP THE PLACE
When you sell your house you spruce it up, right? Same thing for your business. You don’t need a wall-to-wall paint job but at least straighten it up. Throw away all those boxes in your office, dust off the chairs in the conference room, make it look nice. Company is coming.
SUBVERT YOUR EGO
When buyers purchase real estate the three most important things they look for are location, location and location. When people buy companies they are interested in management, management and management. Chances are that you won’t stay around for a long time after the sale. Buyers will therefore be far more interested in the management of your company than in you, the lame duck owner. So, on a plant tour, don’t show off by personally quoting machine times and reject rates. Ask the worker to answer the questions. Show off your team. Allow the Sales Manager to explain the sales strategy. Let the Marketing person describe the advertising program. Those are the people who are important to the Buyer.
Along those same lines, Buyers often want to have a Management Presentation and Sellers should want it too. If gives you yet another chance to further promote your company. These Buyers have received a Book with a great deal of information, but this gives them a chance to dig deeper into the business. This is fine but also keep in mind there will be a Due Diligence process later for the one Buyer whose offer is accepted, so hold back on the fine details until then. And, again, you’re a nice person but be sure to include your key people in this presentation. Those are who the Buyers really want to “size up”. (For you skeptics, are you beginning to see more reasons to tell your employees what’s going on? They become part of the process.)
SELLER DUE DILIGENCE
All Buyer candidates have been pre-qualified with varying degrees of research; now it’s a great time to find out more about them. You should ask them to make a short presentation about themselves and you should not be afraid to ask penetrating questions. Don’t forget to ask them about the deals they have done in the past and ask permission to get references from the owners of other businesses they have purchased. Sellers often do not sell to the highest bidder. Rather sometimes they sell to those they think stand the best chance of actually closing the deal and to those they feel they can trust the most.
Selling your company is a process. The intent of a Teaser is to get people to request a Book. The intent of a Book is to stimulate a visit. The intent of a visit is to stimulate an Offer. Treat the performance of each step accordingly and you’ll be well on your way to setting yourself up for a great sale. Good luck!