March 26, 2021
A Tried-and-True Success Principle
About a decade ago, I watched a business owner masterfully walk a prospective customer’s purchasing committee through his sales process. It was a combination of education and positioning, sprinkled with notes as to why his product was superior to that of his main competitor. He also made sure to include his empathy for the user’s plight, which I found particularly insightful. While this business owner desperately needed this sale, he remained calm and listened politely to the comments and concerns the buyer’s engineering team brought up. He was in the hot seat, and this was his moment to shrink away or shine in victory. I watched as he deftly addressed each key concern with empirical data, real world examples, and the sort of integrity that made you trust he had his client’s best interest as his top priority.
When we were driving off, I said something along the lines of how impressed I was with him and that I thought he “left it all on the field.” He turned to me and said, “Matt, I’m 63 years old, and I’ve been selling this product my entire adult life.” It was obvious he had the chops to get technical with engineers and purposeful with users while
simultaneously appealing to the value aspects required to keep the purchasing representatives engaged. Then he said the thing that has stuck with me ever since that
day, “Even though I know this product better than anyone alive, I’m not talented enough to walk in there unprepared.” What a life-changing statement!
When you need something badly and you only have one shot to get it right, how intense is your personal preparation? Olympians prepare their whole lives for a few seconds of competition. Preachers prepare all week to deliver a 40-minute message each Sunday. Pilots train on simulators so they will have no surprises when life-or-death situations arise. My questions to you are: “Why wouldn’t you treat the process of selling your business with the same intensity? Isn’t your business your largest asset? Isn’t it your family’s livelihood and legacy? And is not selling it your one shot at maximizing the value of your lifetime’s efforts to improve the world?
I am continually baffled when I meet extraordinarily successful business owners who (in my opinion) are not as focused on the prize as they should be once they decide to sell their company. Some owners focus on limiting what their advisors will earn instead of concentrating on maximizing what they are able to clear. Others are not willing to expend the effort required to develop and validate data required to defend their opinion of value, which leaves them open to potentially having the deal “traded down” to close. Many would rather defend their status quo instead of looking at their asset through a fresh lens the way a buyer will. And not a single seller we have ever encountered knew going into the process just how intense matters would get before their buyer and their buyer’s lender were willing to swap millions of dollars for the keys to the castle. At our closing celebration dinners, we ALWAYS have clients tell us that they “knew we tried to prepare them for the scrutiny that would come, and they thought they understood, but they never imagined it would be that comprehensive and that hard”!
When you couple the emotions of a business seller and their need to “get the best deal (the highest price with self-serving terms)” with the emotions of a buyer and their need to “get a great deal (lowest price with risk-mitigating terms),” you have a recipe for the most intense negotiations, proving-out exercises, and protective documentation you are likely to ever experience in your life. These variables are present in every deal, and they cannot be lessened or changed if you want to finish big. So, hear me out when I tell you the variable that makes the biggest difference in the sale of your business is who you choose as your transaction advisor. To say it short and sweet: you want an advisor who best prepares you and your business, who correctly frames your story, who clearly articulates the opportunity, who understands and helps you employ favorable tax strategies, who correctly models cash flow forecasts, who conveys inventory specifics, who negotiates working capital allowances, and who understands your HR strategies. You want an advisor with the business acumen to define and interpret your contracted obligations. You need to find a transaction advisor with the skill and preparation of a world-class brain surgeon because, like life-or-death surgery, you only get one shot to exit your business, and you want it to be the best exit possible…don’t you?
If any of this resonates with you, I would encourage you to take our Sellability Assessment and talk with us to see if your business makes the cut as one who can still command a great exit in this M&A environment. We will be in touch quickly to discuss the results. Click here to take the assessment.
About GaP Business Advisors
Gilbert & Pardue Business Advisors (GaP) is a Houston-based business advisory firm serving lower middle market and middle market business owners from coast to coast through representation for Mergers & Acquisitions (M&A) and through business value-growth services such as Fractional CFO, Advisory Board, Executive Coaching, and Consulting.
Matt Gilbert and Bret Pardue established GaP to provide owners of lower middle market and middle market businesses – those businesses generally enjoying annual revenue of $5-$75 million – with the quality of M&A representation and value-enhancement services previously only available to upper middle and large businesses. GaP brings highly experienced executives, sophisticated financial and marketing products, proven-effective processes, and fully integrated expertise to every engagement. No other M&A firm serving the lower middle and middle markets provides the quality of representation and transactional expertise that we do.