Tips for Navigating the Exit of Long-time Entrepreneurs

In recent months, I have had the pleasure of working with two lifelong entrepreneurs on the sales of their businesses.  Each of the entrepreneurs had decades of deep business experience, but that experience did not include buying or selling other companies.  Counseling them through the sale process, it was evident to me that we, as deal professionals (including attorneys as well as investment bankers, accountants, etc.), sometimes forget that M&A is not something that many business owners experience on a routine basis.  That being the case, I offer these five basic tips for entrepreneurs preparing to start down this path:

1. Get your legal and financial advisors involved in your potential transaction as soon as you either decide you want to sell or receive an offer or inquiry from a party interested in purchasing your business. Many key deal points are raised by buyers early on, and while you may not be technically committing to completing a transaction on those terms, it can be difficult, time-consuming and expensive to try to change those terms later.

2. If you have not bought or sold a business recently, ask your attorneys, accountants, or other advisors for a roadmap of the process. It will help you feel more comfortable if you have a better idea of what issues and questions to anticipate from the buyer and have realistic expectations regarding timing and transaction costs.

3. You will feel frustrated, angry, impatient, thrilled, and excited at various stages in the process.  Decide whether or not getting your deal done is worth enduring those stages and, if so, know and accept ahead of time that these things are going to happen.  Keep in mind that the deal process is a means to an end that is profitable for you.

4. Share your concerns and questions about the transaction with your attorneys.  Remember that they are on your team and they can only help address issues that they are aware of.  An experienced M&A attorney I know routinely asks sellers before a deal is signed or closed, “Is there anything that keeps you awake at night?”  That is a good way to gauge your comfort level with the transaction and whether or not you have raised every issue you should raise with your advisors.

5. Once you’re in serious discussions with a potential buyer, do not try to hide your business’s weak points.  Buyers understand that every business has “warts” and the earlier in the negotiations that these are discussed and understood by both parties, the smoother the process is likely to go, and the more trust that will develop between buyer and seller.

A Post by Alyssa Hirschfeld, Guest Blogger