August 16, 2022
No one knows your business the way you do. Chances are you have put years or even decades of sweat, equity, and worry into running it and growing it, and with all that comes an intimate knowledge of its operations, its customers, its staff, its strengths, and maybe even its weaknesses. Yet when the time comes to sell, those management and customer-relations skills might not be enough to ensure that the sale is a success rather than a disappointment. Selling a business is a complex undertaking, and doing it right requires deep experience and specialized skill sets that most business owners simply don’t have. That’s where transaction advisory services can make all the difference.
As a provider of deal advisory services ourselves, we have seen far too many transactions derailed when the owner doesn’t have the right team behind him. The advisors who served you well during your business’s operating years, like your accountant or lawyer, might not be the best qualified to help you sell your company. And yes, we have encountered some owners who think that they can do it all themselves. Yet the reality is that there are so many factors to consider – not just value and price, but also financial, tax, legal, and regulatory issues – that anyone going it alone is practically guaranteed to be disappointed when they finally do sell. In our view, enlisting the aid of qualified, experienced, and knowledgeable transaction advisory services providers is an absolute must.
1. You will know what your business is worth
To maximize the return on your years of running your business, you need to know what its value truly is – not whatever your friend across the fence says or however much your counterpart in the next town over sold theirs for. These anecdotal comparisons, as well as rules of thumb like applying “industry multiples,” can lead owners to incorrectly value their business – and potentially walk away from a good offer or fall for a bad one. A good transaction advisor can help you develop an objective, evidence-based assessment of your enterprise value, so you can negotiate towards that price. As well, you will have a sound estimate of how much money you will have after you sell, allowing you to realistically plan for the next stage of your life.
2. It can help you sort out the complexity
There are a lot of intricacies involved in negotiating the sale of a business – financial, legal, tax and regulatory issues, deal structure, contract provisions and offer details, and a whole host of “soft” considerations like negotiating tactics and stakeholder input. An experienced advisor can navigate these myriad of factors and objectively analyze their potential impact. They can also step in to handle negotiations on these and other sensitive issues with which you are probably not familiar, all with the goal of maximizing the price buyers are willing to offer.
3. It can keep the sale process moving
More often than not, time kills deals. Potential buyers sometimes try to slow-hand negotiations, reasoning that the seller will just get worn out and distracted by other things. When that happens, a good transaction advisor can work to get the sale process back on track. Staying on point and keeping negotiations moving quickly can help mitigate the risk of your accepting a sub-optimal bid simply because you want the darned thing to be over.
4. It can help you stay objective
Or rather, a good transaction advisor can bring objectivity to the table when you, the owner, might be tempted to respond with emotion. Usually, an owner doesn’t just have their wealth and sweat equity tied up in the business, but also their sense of self-worth. In the heat of negotiations, that can make it difficult for owners to keep an unbiased view. But a knowledgeable transaction advisor can bring objectivity and composure to negotiations just when emotions threaten to get in the way. They can calm everyone down and point the process back in the right direction.
5. It can help you keep the business running
A sale transaction can take a long time, and reaching a good outcome can be exhausting. But if you are putting in all your hours trying to sell your business, who’s minding the counter? A reliable transaction advisor can give you the time and the confidence to concentrate on what you are good at – running your dispensary, office, clinic, or store – and to not be continually distracted by every clause and counteroffer and codicil that comes up in negotiations.
6. You will have a centralized knowledge base and team leader
During a sale negotiation, a lot of information about you and your business will be passed around. Keeping track of it and sorting through it can be a real hassle – and a missing document just might be enough to derail the process. A competent transaction advisory service will have the IT infrastructure and the experience to securely warehouse and access important data so the worst doesn’t happen. And documents aren’t the only things that can go rogue. A business sale typically requires not just one advisor, but a team of them, including lawyers and accountants. If their efforts are not coordinated, it’s a recipe for disaster. A good transaction advisor can function as a quarterback, ensuring that everybody recognizes they are on the same team, working together to achieve the same goal: maximizing your return.
In our view, it is imperative that any business owner contemplating a sale get the help that only a competent transaction advisory services provider can offer. The complexities of selling a business are very likely beyond the skills you have learned from operating it over the years, and getting to the right sale price requires specific experience and expertise. The point is, if you are putting your organization up for sale, you should not go it alone – and the good news is, you don’t have to.