How to Not Mess Up Your One Shot at Selling Your Business

When you decide to embark on the sale of your company, it can feel like you’re on a surfboard having just caught the biggest wave of your life, and then things can quickly transition to feeling like that same wave is now pulling you under.

What you thought was the adventure of a lifetime can quickly feel more like you’ve breached a levee and the water is now gushing out at a rate you couldn’t have imagined. It’s like you’ve opened Pandora’s box and chaos has ensued. The metaphors for this process are endless. You’ve unleashed a seemingly unstoppable and uncontrollable force in your life and business.

This is a vulnerable moment even for seasoned, tough entrepreneurs, because this “force” that takes control can create a sense of inevitability in your psyche.

It isn’t that you don’t have the chops.

You’ve had to be shrewd your whole career.

Customers are asking for price decreases or threatening to move their business to a competitor. Vendors are pushing through price increases when you have limited options to move your purchasing elsewhere. Key employees are asking for a raise in order to keep them from walking to a competitor. Everywhere you’ve turned, there’s been a negotiation awaiting you.

Now you’ve opened the door to the most important negotiation of your life, but this is a whole new world for you. The pace is different, the advisers are different, the vocabulary is different, and the questions never stop coming. Frankly, it’s exhausting.

So, as you are flying down the whitewater of the sale process, you must remind yourself that you are still in control and are choosing to explore the possbility of sale, and you can also choose to walk away from it. 

You see, this process is complex and designed to sweep you up in emotions. There will be enormous pressure to become a passive part of a process, and no longer the main character.

This leaves you in a weakened state and subject to making decisions against your better judgment, the wise judgment that you’ve relied on your entire career as a business owner.

So, if there’s one thing you must do when selling your company, it’s to convince yourself that you do NOT need to sell. 

Just keep telling yourself, “I do not need this deal.”

You know this intuitively as a successful business owner. If you’re a pushover in negotiations, you wouldn’t have made it this far. It doesn’t mean that you need to treat this negotiation like you’re buying a used car for cash; you don’t need to haggle or be aggressive. You can build great relationships through hard negotiations.

But you must convince yourself that you are OK to walk.

From spending a number of years on the buyer’s side of the table, I can assure you that disciplined buyers have no emotion about the purchase of your company. Don’t give them the upper hand by overcommitting yourself to getting a deal to sell your company done.

If a buyer smells desperation, time is on their side. They will wait you out to extract the best possible deal they can.

If you can convince yourself you don’t need this deal, it will give the other side the sense that they better put their best offer forward. It also demonstrates that you could be a valuable ally if partnered with them.

If you’re too easy to negotiate with, they may feel they’ve been struck by the winner’s curse, a nice way of saying they might feel they’ve paid too much for your company. You don’t want this because there is a period between the signing of a Letter of Intent (“LOI”) and closing the deal, which is called due diligence. During this period, they have the opportunity to back out for pretty much any reason. You want them to feel like they just edged out a bunch of bidders that were nipping at their heels.

First, define your goals up front, things like an acceptable price range, other key financial terms, your post-sale role, how you’d like your top people to be treated, etc. 

Recommended Read: What’s Going to Happen to My People When I Sell?

Then, enter the process convinced with all your might that a sale is optional and you’re fine to just keep operating your company. That attitude will keep you far ahead of most sellers when you come to the market.

Finally, make sure you have the proper team in your corner.
That’s where Doescher Group comes in.

I’ve watched this play out time and again over the years of doing this work.

I mentioned above that buyers don’t bring emotion to these deals, and that’s only partially true. They have their own institutional inertia, and you can play this to your favor the same way they try to do it to you. For example, once they’ve invested potentially hundreds of thousands in professional fees on due diligence, they are heavily incentivized to close the deal. You can use this to your advantage as well, but only if you maintain credibility with the buyer that you could walk away.

It’s a lot of work to maintain this mindset, especially as you approach the sale date. But that’s when this mental resilience becomes absolutely crucial. If you can stare down the buyer and convince them that they must meet all of your requirements or risk losing the deal, you will have set yourself up well for a great result.

Ready to ride the wave of a lifetime? We can help.