Surprised. Pleasantly surprised along with wonderment is how I’d describe my reaction when a lady I didn’t know came up to me gushing with thank you after thank you. Why I asked? She told me it was for my help in getting the business buy-sell deal done. The buyer, she said, was “A breath of fresh air.” She loved working for him.
This is not unusual (to have the buyer be a breath of fresh air). Here are a few more examples from a variety of clients:
- Spending the first few days of ownership doing, “Management by walking around” to get to know the employees and small-group meetings. He said they told him the previous owner never did either.
- Immediately learning the team’s skills and delegating. Did they sure liked that.
- Taking routine tasks off management level peoples’ job description so they could concentrate on growth and productivity.
- Doing a survey of the management team to find out what they thought were the strengths and weaknesses.
- Sitting down and listening to the employees. Listening. Wow, what a concept.
But what if the owner doesn’t want to sell and let a buyer be the breath of fresh air? Here are some tips and realize when doing these things you’re really preparing the business so you can exit with style, grace, and more money.
- Perform a “mock” due diligence. The best is to have an outside pair of eyes make the observations, ask the questions, etc. Next best is to have a group of managers do it. The worst is the owner doing it themselves because they’ll see and hear what they want to see and hear. This is a lot more than the numbers. It’s diving into customer relationships, employees, management, IT, suppliers and supply chain, etc.
- Work on eliminating dependencies, starting with any owner dependency, and moving on to customers, employee, supplier, the lease, a certain technology, etc. When the owner is the business, it reduces value the same way as if there’s 53% of sales to one customer or one supplier who in effect controls the business.
- Exploit any growth opportunities. Don’t just take orders, reach out. I have a quote in my computer from my friend Keith Jackson with Industrial Revolution and it’s, “It’s amazing what happens when you pick up the phone and call your customers.” That’s being a breath of fresh air.
- Take action. As another good friend, Rod Jones, says, “Have a Nike moment.” Every strategy advisor will tell you there’s no shortage of good strategies but there’s a lack of implementing.
Many years ago, a wise old business broker told me the unprepared business (and seller) will have it take twice as long to sell (vs. a prepared business) and sell for much less. He added, “Selling a business is like painting a house. All the hard work is in the preparation, the painting is the easy part.”
Was he right with his comments? You better believe it. In a just released survey by the International Business Brokers Association in conjunction with M&A Source we see the following from deals in Q2 2021:
- About 2/3 of sold businesses in the survey did no exit planning. None.
- About 20% did some exit planning, for less than a year, which includes simply talking to a broker.
- Depending on the size of the business, anywhere from 45% to 71% sold because of an unsolicited offer.
About 20% did some exit planning for less than one year, which includes simply talking to a broker.
Depending on the size of the business, anywhere from 45% to 71% sold because of an unsolicited offer.
To summarize, they weren’t ready, they were probably thinking but not taking action, and when the situation arose, they jumped on it. Ready or not, here we come, was the mantra.
As I’m writing this a friend emailed me and asked for a couple copies of If They Can Sell Pet Rocks Why Can’t You Sell Your Business (For What You Want?) for friends of this thinking of exiting. I’ll make the same offer to those of you reading this. If you’d like a complimentary copy of it (or any of my books) for yourself, a friend, or client let me know and I’ll get one to you.
Realize what I write above is not easy. It takes time, effort, leadership, and buy-in. To quote 2021’s favorite seer, Ted Lasso, “Takin’ on a challenge is a lot like riding a horse. If you’re comfortable while you’re doin’ it, you’re probably doin’ it wrong.” But it’s worth it.
