Selling a company is a complicated and intricate process. The preparation to sell can often take up to 12 months (and sometimes longer). The sale can take equally as long.
If that comes as a shock to you—and it does to many first-time sellers—stay with me. The sales process should be long. After all, you spent years building your business. Do you really want to turn around in seconds and sell it?
Chances are if you say “Yes” to that, then you’re motivated only by the money. Not a bad thing; many people are. But something tells me that for most of you, if you’ve spent years building a business into a multi-million-dollar enterprise, then you have some emotional attachment. If that applies to you, you’re not alone; it should be a complex and complicated process to let it go.
So, stay the course. I promise the reward outweighs the boring, tedious parts of the process that can make your head spin. It may help to liken the selling of your business to selling the sum of all its parts, rather than focusing on the final step; if you look at it that way, then you’ll more easily recognize that the process is managed well in stages. Many who’ve come before you have emerged victorious. You will as well.
To make the whole process easier, there’s one key thing you cannot go without: a great team. As you are assembling your team, remember that one of its most important members is a good attorney. To help you find the right one, I spoke to Mike Coker, one of the best transactional attorneys I know.
Mr. Coker has a long track record representing clients in multi-million-dollar exit sales. He’s also an “AV Preeminent” Peer Review Rated attorney by Martindale-Hubbell®, the highest recognition possible in the legal industry. Let’s go through some of the insights I gleaned from my conversation with him.
#1: Initial Questions are Crucial
Finding a great attorney starts with asking the right initial questions. Make sure you interview prospective candidates to find out if they’ve handled your particular type of sale before. Ask them about their track record, too, and make sure you can speak to former clients about them. Along with talking to former clients, speak to your CPA or other accountants about the attorney.
While it’s important that you ask prospective attorneys some questions, they should also ask you some questions. Mr. Coker, for example, said that the first thing he asks every client is, “What are you planning to do after you sell? Have you considered how this is going to affect all your employees and the people you support? What are your reasons for selling?”
Make sure you’ve thought about your motivation for selling before you start interviewing attorneys—and before you start the sales process. Make a list of the pros and cons of selling, and use it to help come to a logical and well-informed decision. At the same time, spend some time thinking about what you’ll do after you sell. It’s a big change; it’s vital to be prepared.
#2: Understand the Process
Once you’ve interviewed prospects and decided on an attorney, your job isn’t finished. It’s important that you understand the sales process and what role you will play in it.
First and foremost, get your accounting in shape. Work with a good CPA (your attorney can recommend one if you don’t have that member of your team yet) to get your books in order.
Next, start targeting your prospective buyers. It often makes sense to use your lawyer for this part of the process. Mr. Coker advises targeting your competitors; so, if you already know your top competitors and have buyers in mind, that’s a plus.
Finally, make sure you understand how the attorney will proceed with contacting the buyers without leaking the sale or breaching confidentiality. Mr. Coker, for example, explained that his team calls the buyer anonymously and asks if they might be interested. Then, they draft an NDA and ask the potential buyer to sign it before disclosing any details about the sale.
#3: Be Part of the Team Effort
When you have a great team around you, it can be tempting to step back and let them handle every single detail. Avoid that temptation, though—remember, this is a team effort. That means your team will all be working with you, but they’ll also be working with each other.
For example, your attorney will work closely with your financial advisor to start the financial planning. This is so crucial that they should start the process before the sale is complete. Same for the estate planning: it should begin well before the close.
Because collaboration is so important to the success of the sale, make sure you trust and like everyone on your team. In some instances (like your financial planner), you’ll be working with these people far beyond the duration of the sales process; if you don’t like them or trust them, it’s going to be very difficult to have an effective and productive relationship.
You Have the Final Say
A great team is crucial if you want a good sales outcome. Ultimately, though, remember that you are the one making the final decisions. Your team—especially your attorney—is there to advise you, but you have the final say.
This is especially important to remember when you’re considering which offer to accept. Sometimes, your emotions will draw you to one offer over another. The one you’re drawn to might not be the best financially, but it might appeal to your emotions (or you might simply like the person who made the lower offer better).
Your team can advise you on which offer is the best fiscally, but they should not get in the way of a sale. However, they should never nitpick or stand in your way. Their role is to move the sale along and advise you about potential risks.
Bottom line, when you are embarking on an exit sale, particularly a multi-million-dollar exit sale, make sure you have a great attorney, CPA, and financial advisor on your side. I’ve seen it over and over: having a stellar team truly can mean the difference between a successful sale or a failed one.
This content is adapted from Seasons of Selling.
