Sale process can be delayed or derailed with poor preparation
Talk with any business broker/investment banker or even active acquirers of small to mid-sized private companies and they will share stories of deals they’ve worked on that went south in the final stages due to the seller not being mentally prepared to sell their business. Owners/CEOs think in terms of preparing their business for a successful sale to a third party, but too often they don’t give the needed thought to their mental preparation.
Here are some real-world examples of owners and CEOs that delayed or derailed getting their company sold to a third party:
- As the closing date for the transaction came within 30 days, the seller realized they would no longer have an office to go and realized they’d be home each day. They conceptually knew this months prior to the exit, but 30 days away the reality truly set in.
- An owner that realized that when they met new people, how proud they were to convey when discussing what they do for a living, that they own and run a business. Reality set in just 2 weeks prior to closing that they would no longer be able to say this and were now unsure of what they would tell people about what they do for a living.
- The owner that didn’t realize upon the successful transaction closing of selling their company, they would no longer have health insurance for their family. Great stress kicked in for the owner and spouse as they felt rushed in having to figure this out and it delayed the transaction closing.
- The company owner that hadn’t mentally prepared for losing a weekly paycheck once the company was sold. Hadn’t though this through as to where ongoing cash flow was going to come from.
- The seller that got close to the finish line to sell their company only to start thinking about how their employees might respond to the sale. They realized the particular acquirer might not invoke confidence in the employee base and needed to rethink the sale.
Stories like this could continue but the bottom line is this. Think as much about preparing your company, as yourself mentally, years in advance of attempting to sell your company. You can avoid the stress and financial cost that arises from delaying or derailing your final exit stages of working with an acquirer. Use time as a friend to prepare you business and yourself for the event of a lifetime. This exit event should be one that makes you and your family euphoric. Hope and dreams alone won’t get you there, but a sound, well executed plan can.
