30 Mar 2021
The Wolf On Main Street: Interview with Michael Mitchell
Today we look at the process of selling your business. You may hear of this process referred to as The Deal or the Transaction. Your deal, or transaction, is the culmination of your years of hard work, blood, sweat and tears. The amount of money you walk away with is dependent on a number of variables. I hope that your biggest takeaway for my shows this month is that preparation is your key to successfully selling your business.
Selling your business is a process. Today, I want my guest to give you a peek at what happens behind the curtain of the deal. I want you to be ready for the business colonoscopy. I want you to be so prepared, so ready, that you don’t feel a thing!
We’re going to talk about the things owners do that get in their own way, that they do wrong, or how they subconsciously sabotage the entire deal! This happens all too often.
KEY ISSUES: Problems You May Encounter:
In my experience, these are the obstacles that owners don’t prepare for, lead through, or navigate successfully, during the transaction.
1. Owners don’t really know what their priorities are before they begin the transaction process. It is too late to think about the well-being of your employees once the purchase agreement is signed.
2. Owners don’t think about who their ideal buyer is or what their attributes should be.
3. Owners don’t really know how much their business is worth. Michael recommended the Goldilocks method - ideal price, acceptable price, minimally acceptable pricing. It is very important to get the pricing right, to attract the interest that you want.
4. Owners have built the entire business around the owner.
What You Need To Know - THE WHAT:
Folks, you need to know what other companies in your industry and in your geographic area are selling for – I encourage you to do some market research.
If you belong to an association, ask for the names of other owners who have successfully sold their company. Get in touch with them and find out what their experience was like and what they would do differently if they could have a redo. I also recommend that you listen as closely to what isn’t said as to what is said in those conversations.
Next, make sure you build relationships with advisors who have had experience as part of a deal team. That experience will be a huge source of strength during the transaction process.
Almost every deal has moments where the door opens to renegotiate the purchase price, or an accounting practice is questioned, etc. you want your advisors to be calm, professional, and to add value to your position, not detract from the value of your company.
Here are the steps that Michael outlined for your transaction:
Get your business appraised.
Talk to your accountant.
Determine the kind of sale you will execute.
The book of information is written.
Advertising.
Attracting and educating the buyers about your company. NOTE: This is the time to get those prospective buyers to submit their personal finance documents and to sign an NDA.
Letters of Intent are submitted and the top prospects are chosen.
Due diligence begins.
Purchase and sale agreements with terms and conditions are signed. Transaction closes.
Michael Mitchell, Business Research Group, Michael@brgbrokers.com, or 1-804-381-6667. Visit Michael’s website here (https://brgbrokers.com/).
