What does representation really give you that you couldn’t achieve on your own?
1. Thorough preparation and planning.
Business owners are among the busiest, most pressured people in our society. While it may be a good idea to plan and prepare for a future sale, it takes tens and sometimes hundreds of hours of work to do it right. If you are working 60 hours a week or more, are you going to have extra time to do the preparation necessary?
Try and think for a minute as if you were the potential buyer of your business. What would you want to see and how would you want it to be presented?
Every business has flaws, but you can minimize the impact by doing some clean up work in advance. Make sure that when it comes time to talk to buyers that they focus on the strengths of your business. Presenting a concise, clear packet of information with answers to all the questions they may ask improves their initial impression.
Your business has your personality throughout, but you want to present it in a way that a future buyer sees it as a business, not your business. They need to feel confident of the future growth and success without you involved.
Recast the last five years of income statements to pull out non-essential and non-recurring expenses, discretionary expenditure, depreciation and amortization, owner compensation and benefits. It also makes sense to standardize and clean up the accounting. Also, make the necessary balance sheet adjustments.
It is not essential, but it certainly helps to have an independent staff of researchers, writers, accountants lawyers, attorneys, and advisors working on the project. In many cases, a proportion of the buyer prospects will drop out and lose interest if you do not have all the necessary information immediately available in a complete package up front.
2. Negotiating the deal.
It’s more likely to be successful for us to ask for more money than if you ask for more money. We know what to say, what not to say and can use our best poker face when we need to. Ability and strength in negotiations comes from practice, refinement and repetition and we’ve done this hundreds of times before.
By this stage, we should have a very clear idea of what you are looking for and we will do whatever it takes to achieve that. It’s up to you how much pressure we put on the buyers – we will tell you what we think and what works best, but it’s your deal, so ultimately you tell us what you want us to do.
Your adversaries in these negotiations are going to be experienced, trained and well practiced in these types of negotiations. You want to have an expert team on your side.
3. You are the friendly face.
They are buying your company, not our company. Negotiations can become drawn-out, tense and difficult. If you maintain a position of helpful cooperation with the buyer, but stay away from direct negotiations, it works better for you.
After all, if they end up paying a top price, you can blame us for tough negotiating while you remain a friendly face. They’ve still got a great deal, you remain on good terms with the buyers, but you’ve also got the price and terms you were looking for.