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One of the things we always want to speak more about is what happens after a sale. Is there a happy ending? What’s the sequel? These stories matter too.
While we can’t always plan for a sequel, we can do a number of things to make sure your business has a happy ending, i.e a successful transition and future without you. But sometimes promises are made by a buyer that a seller interprets in another way, and problems result.
Saying the Right Things
The “right things to say” sound just as good in an email as in a press release in a newspaper. You might hear phrases like:
- We don’t want to change too much
- We want you to stay involved
- We like your team and want them in this next phase
These phrases are vague, making them easy to say.
Hearing the Right Things
Sellers love hearing phrases like what we saw above. These sayings:
- Validate their hard work: they have a business someone wants
- Give them assurance that they will profit, but that their team will be “taken care of”
- Point towards a finish line: the feel-good factor of the positive feedback has a momentum of its own, pushing towards a deal
Sellers have to be careful that they aren’t just hearing what they want to hear.
What Might Happen, What Can Prevent That?
If you want to turn the vague platitudes into meaningful commitments, they are going to need to be part of the final agreement. Here are some ideas related to what we mentioned already:
- If you don’t want key employees and staff getting laid off as soon as the deal is inked and the wire is received, you have to have that commitment in writing. This isn’t a question of asking the buyer to keep staff forever, but if you want protections for your team you have to spell those out. Sometimes, it’s just a necessary part of a transaction that a buyer will not need every employee. This is especially true when selling to private equity or strategic buyers.
- Some sellers are happy to be gone right away and we have definitely dealt with someone signing in the morning, saying goodbye to their team, and getting on a plane in the afternoon. But if you want to stay on in any kind of role and/or have an earnout, make sure your incentives are aligned, whether that’s on employee retention, overall revenue, or revenue that you’re directly responsible for in your new role.
- Some sellers are very attached to the branding and culture they have built: it’s a reason they have a business to sell in the first place. Others are happy to let a new owner write a new chapter. Ask yourself questions about what really matters to you regarding the brand. You can’t expect to sell and still retain control over everything ‘from beyond the grave.” Be strategic in what you let go and give free rein to the seller: this will give you more bargaining power when negotiating about what really matters to you.
- Do due diligence on the buyer. Very rarely will you run into a buyer who is a hermit with no digital footprint. Don’t be afraid to ask the hard questions or that failure may haunt you later.
Of course the secret weapon here is key advisors: not just your banker, accountant, or lawyer, but your Apex Advisor. We have done this many times and we can see obstacles and problems before you do, and we’ve got lots of options to help you deal with them.