One Buyer = No Buyer [Part 1 of 2]
– Do You Have the Skills, Knowledge…and the Time? –
Some business owners, when they’re ready to exit their business, try to sell their company themselves. After all, who knows their company better than they do, and could talk about it endlessly? And, how tough can it be to sell a business? They’ve successfully run their business for many years, and what can be tougher than that – plus, they can save the fee of an M&A Advisor!
This situation, which I’ve seen many times, reminds me of the TV commercial showing a man posing as a surgeon in an operating room. After performing the complex surgical procedure, he plainly admits he isn’t a doctor, but proclaims that he had stayed at a Holiday Inn Express the previous night. This was one of a number of Holiday Inn Express commercials suggesting that smart people stay at their hotels – so anyone who stayed at one must be smart. I chuckled about the parallels with those business owners who want to sell their business themselves, because they have been so smart running their company.
Three Significant Problems with this DYI “Project”
First: Whether it’s something as complex as surgery, or as relatively “simple” as selling a business, unless you have the training and experience, you simply don’t know what, when, and how to do it [see the 37 Steps in Selling a Business];
Second: A business owner just doesn’t have the time to do all that’s required to sell a business [see 37 Steps…above]. Every business owner I’ve ever met barely has enough time in the day just to run his business; and
Third: And, most obviously, how does the business owner maintain confidentiality when the buyer knows the company right “out of the gate”?.
One Final Point
This leaves me with one final point regarding why having one buyer is almost like having no buyer – even if a business owner: (i) knows all the steps required to sell a business, and (ii) has the time and expertise to execute them in the proper sequence – dealing with only one buyer is a very poor strategy. Only when a large group of potential buyers are brought into a well-orchestrated “competitive” process will the business owner get the maximum value, best terms, and the highest certainty of closing the deal. That’s the value brought by the right M&A professional. And, if the business owner is only talking to a single buyer, he is wasting his time – and postponing the eventual sale of his business.
I’ll be writing about why this is true in my next blog. In the meantime, let me know if you’d like to talk about this subject directly with me.
The Summit Acquisitions Group — Business Brokers and M&A Advisors — specializes in the sale, appraisal, and financing of privately owned companies ranging in valuation from $750,000 to $25,000,000. Contact their offices in Atlanta, GA or Charlotte, NC for a free consultation.