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MEDIA - PRESS COVERAGE |
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Figure out priorities when selling a business
SOURCE: GREEN BAY PRESS GAZETTE October 7, 2007
By Scott Bushkie, CBI, M&AMI
When it comes to selling your business, you don’t want just any buyer, you want the best buyer. The market is strong and sellers are receiving multiple offers, but the buyers they choose aren’t always the ones with the biggest checks.
Deal structures can include a variety of options which should be carefully considered and evaluated, long before you reach the negotiating table.
Whether you realize it or not, you’re positioning and negotiating from day one of a sale. If you haven’t considered your priorities s, you might give a buyer the wrong impression and that can have serious consequences.
Suppose you and the buyer are talking casually and the buyer asks how long you’ll stick around. You assure her, “I’ll be here as long as you need me,” and wave off the question.
Now the buyer has a two year transition in mind when she makes her offer. Problem is, you and your wife got to talking about how all your friends moved to Florida, and you’ve decided to join them this winter.
That kind of change can blow up a deal. It’s always easier to give the buyer more than expected than take something away.
These are some of the most common choices a seller will encounter:
Financing: Would you prefer a higher offer with some seller financing or a lower offer with cash at close?
Trust: Do you trust the buyer? I’ve seen sellers pass up higher offers to work with a buyer they liked better.
Legacy: Will the buyer be successful? Most sellers don’t want to cash out and watch the company erode. Ten years from now they want to look at a successful business and say, “I helped build that.”
Employees: Will the buyer relocate or replace staff? Sellers often feel protective of their employees.
Ownership: Do you want to maintain a minority stake for yourself or family?
Real Estate: Will the buyer want the building? If the buyer doesn’t want your facility, how soon can you fill it?
Transition: How long does the buyer need you to stay? Do you want a long-term contract or a quick exit?
These are not easy questions to answer. A reputable M&A advisor will ask the right questions to help you organize your thoughts, will review your priorities and help you understand what the market will bear. When you truly understand both of these, you’ll be in a better position to negotiate and close the deal—without sacrificing your goals.
Scott Bushkie is President of Cornerstone Business Services, a lower-middle market M&A firm with offices throughout the upper
Midwest
. Reach him by phone at (920) 436.9890
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