by Zachary Corson
After years of hard work creating and growing your business, you finally decided that the time has come to cash in and sell your business. The thought of the next stage of your life is in your head and you know you can do anything you put your mind to. You have already grown this amazing business to the level you dreamed of in the past. The next step is the journey through sale.
Now is the time to stay strong as it will make a large impact on how your sale will go. The sale process normally takes six to eight months but can take longer. You will most likely have a period after the close to stay on to help make the transition as smooth as possible. The transition period is often around a year. If you decide in your head today that you are ready to sell, remember it will probably be almost two years before you are fully out of the business.
When discussing the amount of time it takes to sell a company, business owners are often surprised. As an M&A advisor, we typically spend 2000-3000 hours on each deal we are involved in. Even though M&A advisors significantly cut the amount of time a seller puts into the transaction, the seller still will end up spending a large amount of time working on the sale of their company. As hard as an M&A advisor works to qualify buyers and make sure the buyer has all the key information ahead of accepting a Letter of Intent (LOI), some buyers will start the due diligence process while under LOI and decide to back out of the deal. Sellers really start losing the wind in their sail if this happens. Stay strong when hurdles get in the way, it pays!
Planning helps reduce seller fatigue. A fully prepared seller gets their ducks in a row well before sale. From making sure all contracts are assignable to having audited or reviewed financials; the list of pre-sale items is large, but it is much easier to prepare these items before sale than it is to try to get them organized and correct during the selling process. Also, buyers have a lot more trust in financials and documents that are correct the first time they receive them, which helps move the sale process to close quicker, and make buyer offers more secure.
Purchase agreements for companies are long and tedious legal documents. These documents are important for you as an owner. Stay involved, read through the agreement and make sure you understand it. At the Douglas Group, we know this one of our many strengths. We have never had a seller sued by a buyer. We review the purchase agreement repeatedly as we negotiate changes in our seller client’s interest. You as the business owner will be busy during this time working on due diligence items and running your business, but you must also make time to review and understand the entire purchase agreement.
Your M&A advisor is there for you to lean on and protect you throughout. The combination of the time, mental, and even physical wear on an owner can be significant throughout the sale process, but remember how close you are to the pot of gold at the end of the rainbow! Remember how hard you have worked up to this point and don’t give up. It’s worth it!
If you would like more information, please contact Zachary Corson here or call 314-991-5150.