What You Should Know Before You Sell

We spend a lot of time talking about (and writing about) valuation issues in the context of a sale.  But what about the actual sale process itself?  I’m a closet Quora junky, and this popped up in my feed the other day.  Some great advice in here.

TL/DR: It’s more complicated than you think.  

Selling a company is NOT like selling a house.  You don’t drop a sign in the front yard,  you don’t have an offer at your open house…. and it’s likely to take 6-12 months.  With in mind, here are some snippets from that Quora response that really resonated with me:

1. Mike Moradi writes “Hire a Transaction-Oriented Attorney who has lots of M&A Experience.”   This is gold.  I’ve worked on a lot of deals, and one very common refrain in deals that get derailed is inexperienced counsel.  I assure you that the buyer is going to have experienced transaction counsel, and they’ve probably done more deals than you.  Do yourself an enormous favor- hire the right attorney.   Don’t be cheap.  And don’t worry about hurting “your guy’s” feelings.  If they have your best interests in mind they’ll understand.

2. Hire an M&A Advisor (a pretty common theme in this thread of answers).  Why?  First- expertise.  They do deals. You run the company.  Period.  A good advisor will be able to quickly navigate the deal landscape, source legit buyers, and structure a favorable deal.  Now is not the time to experience the learning curve of this process.  Second- you need to maintain a relationship with the buyer post closing.  Negotiating a big-dollar deal yourself is a really easy way to muck up that relationship.

3. Estate Planning in Advance.  Honestly, this is so basic that it seems foolish to have to mention it, but so many people do no estate planning at all pre-transaction.  Want to save on some taxes, take care of the family, and set up the next generation for success?  That process doesn’t start at the closing table.  Ideally it starts a few years in advance.

So there you have it – 3 “quick” tips on your deal.  But honestly, head on over to that thread and read through the response.  It’s one thing for a “deal guy” like me to talk about this stuff.  But you want validation?  Read the answers of a bunch of cashed-out entrepreneurs and see how closely their advice mirrors what the pro’s say.