I was recently asked if money was the top issue for business sellers (once they’re motivated to sell). My answer was it’s one of the top three, which are (in alphabetical order):
- Employees
- Legacy (including taking care of customers)
- Money
Every owner/seller has different priorities, like we all do when it comes to business and life. There are reasons we stay at our job, leave our job (usually it’s the boss not the company), start, keep, buy, or sell a company.
It’s a rare business owner who doesn’t mention how important the employees keeping their jobs is to the deal. It’s why in all my books (including the upcoming, Company Growth by Acquisition Makes Dollars & Sense) have a diagram of the three-legged stool demonstrating how the buyer, seller, and the employees all want job retention but fear one of the other parties will kick a stool leg out.
Customers are almost as key. I’ve had owners tell me how they don’t want their competitors serving “my customers.” This is legacy. The business grows, the customers are happy, and the employees are happy.
Money is obviously important and at the same time I’ve worked on numerous deals where the seller sells for less (than they could have or less than other offers) because it’s the right buyer. The flip side also happens, buyers pay a little more because they know what they can do with the business and don’t want to lose the deal over money. As a private equity person told me years ago, “If we pay four times EBITDA and it doesn’t grow it’s a bad deal. If we pay seven times and it grows like we want it to, it’s a great deal.”
If you have any other important priorities for sellers let me know.
“If your dreams do not scare you, they are not big enough.” Ellen Johnson Sirleaf
