New Article Series: Top 10 M&A Mistakes
Updated: May 11, 2020
Business owners often subscribe to a set of mistaken assumptions about how companies in general, and their company in particular, are sold. They believe that when they are ready to sell, the best buyer, or perhaps even their own employees, will jump at the opportunity to acquire the business and make them a great offer. They believe that the process of completing the sale of their business will be relatively quick and painless, perhaps only a little more involved than a real estate transaction, and that they, along with their trusted local business attorney, can complete the deal without any additional outside help. Business owners also believe that the value of their business is driven by their company’s historical performance and the value of its hard assets. And finally, they are pretty sure they know who the best buyer will be based on their industry contacts. But I believe something else entirely. I believe that the most successful M&A transactions don’t just happen passively; they are achieved through hard work. Getting top dollar for your business requires specific and proactive action that begins years before you are ready to exit, continues through the sale process, and doesn’t end until months after the deal has closed. It will feel at times like you’ve taken on a second full-time job. I believe the unequivocally best way to sell your company is through a professionally managed M&A process, which will take nine to twelve months from start to finish and will be worth every minute. I believe a company’s value is equal parts objective and subjective and is highly dependent on the buyer’s point-of-view on the company’s future performance. It pays to remember that buyers are buying the company’s future, not its past, though they will look to recent history to validate their views of the future. And I believe the best buyer for your business will most likely be one you have never even heard of, not the one you are picturing.I have spent over two decades leading sell-side M&A transactions as an investment banker, which simply means I represent owners in the sale of their companies. Like a realtor sells homes, I find buyers for $10–200 million companies. I love helping founders and other business owners achieve their personal and financial goals and begin new life chapters by exiting their business. And just as importantly, the companies themselves get a new lease on life with the next owner, ensuring they will continue operating long after the previous owner has retired. Over the course of my career, I have seen numerous instances in which business owners left significant money on the table or had their deal with a great buyer completely fall apart because they took the “For Sale by Owner” approach and weren’t prepared. It pains me, professionally and personally, to see what should be the exciting culmination of years, decades, or even generations of work, end in a disappointing outcome or an altogether failed deal. Over the next weeks, I’m going to be sharing excerpts and stories from my book, The $100 Million Exit, in this article series: Top 10 M&A Mistakes. The $100 Million Exit launched on April 9 on Amazon; here is the link to get your copy: https://www.amazon.com/dp/1641375175! If you want to connect, you can reach me here via email firstname.lastname@example.org or connect with me at https://www.linkedin.com/in/jbrabrand/.