Page 10 - Dec17
P. 10

Four Things To Never Do

          When Selling Your Business

            The M&A market is hot right now
     and could be so in the months, if not
     years, to come. Then it should be no
     surprise to anyone that many owners
     are entertaining the idea of selling their
     business. Some have been thinking
     about it for a while and believe now is
     the time to exit on a high note and start
     working on their other aspirations.

            Just because it’s a good
     environment to sell a company, though,
     doesn’t mean that negotiations won’t
     take time or run into hurdles before
     crossing the finish line. Having a well-                  to mitigate that or practically any
     thought-out strategy before negotiating  problem. Failure to disclose issues puts
     any deal is paramount.                                    everyone’s credibility into question and
                                                               is the fastest way to tank a deal.
            There are a few “must have’s”
     to achieving a successful outcome,                                Make Statements That You
     but also several “never do’s” that will                   Can’t Meet
     prevent a sale from occurring. Here are  This is particularly true with respect to
     the top four:                                             revenue. Most M&A processes take
                                                               a year or so. If the owner has too
            Fail To Disclose Everything To                     aggressive of a sales forecast, it will
     Your Investment Banker                                    become clear before the deal closes,
     The worst thing that can happen is                        and cast doubt on their business. Such
     when something shows up in due                            statements could kill an acquisition, or
     diligence that the owner knew about but  at least postpone it until the company
     hadn’t told their M&A advisor. Owners                     makes its numbers. That’s not a good
     must be right out in the open about                       thing.
     every facet of their business; good
     and bad. Every company has warts,                                 Don’t Have A Backup Offer
     but nearly all can be cured before the                    When a business owner has a Plan
     acquisition closes if the investment                      B, they and their representatives
     banker knows about it.                                    can negotiate from strength. The
                                                               prospective buyer knows that there’s
            It could be something major, such  someone in the proverbial lobby
     as the business’ biggest customer                         wanting a seat at the table. When
     being close to going bankrupt, and                        things start getting tough, the seller
     still not be a show stopper. A good                       will have no problem pushing back.
     M&A advisor has the experience and                        Often the prospective purchaser will
     know-how to come up with a solution                       do so simply to test the resolve of
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