If you enjoy roller coasters, you’re going to love the process of selling your business. When someone asks what emotions they can expect to feel during the deal, I say “all of them.” Being prepared for what you’ll feel is the key to making the process easier and less stressful.
First, the decision to sell can be overwhelming. There’s a running joke among M&A Advisors that everyone is always five years out from selling. Once you understand what listing your business involves, it’s easy to let inertia kick in. “Maybe in a couple of years, when things are less hectic.”
But once the decision is made, you’ll probably feel a sense of immense relief – maybe even hopefulness. You’ll finally be able to take a Monday off. You’ll travel with your spouse. You’ll golf every day. You’ll be able to achieve the dreams you worked so hard for.
Most business owners only sell a company once in their lifetime, so having a trusted partner in the process will be a big help. A skilled Business Broker, or M&A Advisor will have sold many businesses; they’ll be able to view the deal objectively and keep things moving, no matter what stage your emotions are in.
Marketing & Negotiation Phase
Once you and your Intermediary get the business prepared and packaged for listing, you’ll wait for buyers to show their interest. Sometimes, you’ll wait a while. You may get discouraged. But again, your broker can help you understand current market conditions and may help you tweak the listing to attract more attention.
Sometimes, you get lots of attention right away. Euphoria – maybe we should have set the asking price 10% higher! Then it turns out that the interested parties are just tire kickers; no offers come out of the activity. Bummer. This leads to a Seller thinking maybe this was a bad idea. Maybe it’s the wrong time. Maybe I should wait another couple of years. Eventually, you find the right fit and sign a Letter of Intent (LOI). You’re excited! Then begins Due Diligence.
Due Diligence Phase: Valley of Despair
The diligence process can be a tough time for owners. You’ll be questioned on expenses and many financial decisions you’ve made over the course of many years. You’ll be asked why you did things and even why you didn’t do things. There will be paperwork. A lot of paperwork. Meetings, calls, more paperwork. And you’re doing it all while trying to run your business and keep the deal confidential, so your workers and customers don’t panic. Worrying about their emotions can make you even more emotional. This phase of the deal can often lead to frustration, anger, disillusionment and is often referred to as the “valley of despair,” as shown in the image above.
Sometimes, the negotiations can get a bit contentious. Your broker will be able to keep communication flowing, keep the deal moving, and help you navigate what’s important and avoid what might be a waste of your time. But it’s not uncommon for deal fatigue to set in when the diligence process or negotiations drag on for weeks, even months. Some sellers are tempted to call the whole thing off.
Closing & Transition
But if they stick with it, the payoff is always worth the wait. When you get ready to sign the deal, you may experience some uncertainty, even grief. Who will I be if I’m no longer a business owner? Was this the best deal I could have made? Do I know what’s next? I also have to tell my staff that they’ll be under new ownership – that’s going to be hard.
But that’s the last dip in the roller coaster for most owners. Some Sellers may have an employment agreement to work for the Buyer post-closing, which can bring about a whole other dynamic that is better suited for another day. Once you have the “money in the bank” that represents all your hard work and sacrifice over the years, you’ll be free to experience all the pride and the joy that comes with it. You’ll be part of an exclusive club: founders/owners who have built, run, and sold a successful business. Imagine how that will feel.
So, what can you do to manage this roller coaster of emotions?
- Awareness: While every deal is unique, simply knowing that it is normal for Sellers to experience a wide range of emotions is the first step to managing it.
- Focus on the “why”: Remind yourself why you started down the path of entrepreneurship, and why you embarked on this journey to sell the business. It is meant to eventually allow you the freedom to step away from the business without having to worry about finances.
- Gratitude: Be thankful for having a business to sell, and for having a Buyer that is interested. Don’t let the details distract you from the fact that even with a modest business exit, you are probably in the top 1% in terms of worldwide net worth. Things could be worse!
Lastly, show a little empathy for the person on the other side of the table. After all, Buyers also go through a range of emotions throughout a transaction. Who do you think is more anxious while signing on the dotted line, the person receiving millions of dollars for an asset, or the person paying it?
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