Don’t underestimate the power of the Seller: work with the seller & it will be a more meaningful
When facilitating a sale, consultants, coaches and brokers have a certain confidence that they’ve seen it all, and we’ll help our client sell their company better than if they go it alone!
Well, this is true they can help them better than if they go it alone, yet, there are certain things that an external party can’t be as efficient at or as accurate and on point about like the seller.
Goal | Passion | Satisfaction
When someone wants to sell their business, they need to have a clear goal.
The goal for example, could be to relieve financial pressures that could be solved through a sale or a merger with another entity. Financial freedom from some sort of liquidity event can provide a huge level of relief and security all in one step. It doesn’t mean that selling is easy. However, as a goal, when a seller looks back after the event, the financial freedom / liquidity it brought has an enormous impact on their quality of life going forward.
Other goals include being able to expand the management team and create an exit strategy down the road. Regardless of the goal – this is the seller’s goal and while they may need help articulating it, it is their goal.
By knowing their goal, it will be much easier for them to stay focused and on point during a journey fraught with emotions.
In a sell situation that is going to include an earn out, a contingent consideration, the seller is likely staying around to help make sure the earn out is realized. Often the passion that helped them build their business is just as prevalent in their role during the earn out. It can be hard to separate the seller’s passion from what looks like from the outside to be a need to control.
The seller knows from their experience growing their business, which decisions worked, and which didn’t, and they want to be a part of the decision-making process to make the purchaser have as positive an experience as possible and, importantly, that the seller gets their earn out.
There are ways to help the seller channel their passion, and one of the easiest and most efficient ways is through a clear operations agreement that lets the seller put an operations plan on the table that will show how the seller will achieve the earn out and in turn how the buyer will get the value that they are purchasing.
Understanding the transaction by the seller comes when the seller is satisfied that the value is fair, that the payment structure is reasonable and that the vision for their business as an asset is clear.
It is often the concept of what will happen to the business being sold that is one of the largest hurdles to overcome. Sellers are very proud of what they have built, it is almost like the child that they created and raised, the business is an extension of them. The seller really wants to know that there is a future ahead for their child.
However, the future the buyer has in mind is not always the same plan that the seller had. This can be a major deal issue and one that needs to be weighed carefully against the goal of the sale.
Buyers consider deals for many reasons and while they could be trying to take out a competitor, more often they see an intrinsic value that is accretive to their plan. The seller’s consultants often help the buyer to understand their intentions and plans, and then work with the seller to align that plan within the framework of the seller’s goal.
An analogy might be: As a parent you want your children to grow and broaden themselves, bring added value to their life, their community, and the world. This often comes in the form of building a family, having children and nurturing their children in their lives. As this journey unfolds, the “beginning” that the parent started becomes something bigger and more relevant than originally envisioned.
It is the same when selling a business, if there was no goal, no new plan for the future, then there would be no compelling reason to sell. However, if by selling, the seller ca