Selling Your Business? Know When to Walk Away from a Deal – and When Not To
Your business is likely the greatest asset you have, so when it’s time to sell, you’ll want to be sure that you can confidently move on to your next opportunity or enjoy your retirement. Here are some signs that a deal isn’t the right fit for you, and you might want to consider walking away.
The buyer doesn’t agree to confidentiality
All potential buyers should be willing to sign a confidentiality agreement. After all, they will be going through your assets with a fine-toothed comb – and not just your financials, but also your strategic plans, employee data, sales cycle information, and much more.
If your business has had rough patches in the past, the buyer will look to you for a detailed explanation, as well as steps taken to remedy any issues. If you’ve had trouble with one of your vendors, the buyer will want to understand the situation and any alternatives to using the vendor. In short, buyers will seek to gain knowledge of all aspects of your business through the due diligence process, and you need to protect yourself and your business in case the deal falls apart. A good confidentiality agreement will do that, so you can rest assured that your private information won’t become the talk of the town (or industry).
The buyer doesn’t respect your legacy
You’ve worked tirelessly for so long, growing your business and providing for your family. A good buyer will respect that and understand the value you brought to your business. While it varies from person to person, most owners want to see their businesses continue to function successfully after they sell – not get carved up and sold piecemeal. If a buyer’s vision for your company doesn’t look at all like yours, it might be best to look for another buyer who shares your strategy and priorities.
The buyer won’t treat your employees fairly
Your team is critical to your success, and you rely on their expertise. Furthermore, they rely on you for income to feed their families, save for college, and pay for their mortgage. Although you can never completely control what a new owner will do with your team members when they take over, you can usually get a feeling for their intentions during the negotiation process. If a buyer doesn’t realize the value your team brings to the table and agree to keep them in place for a trial period, they might not be the best fit for your company’s future.
When to follow through
On the other hand, there are many points in the lifecycle of a transaction that can be frustrating or disappointing, but don’t necessarily indicate it’s time to walk away. For example, you may desire an all-cash sale, but the buyer needs to secure financing, or you and the buyer aren’t seeing eye-to-eye on the valuation of your business. These are very common situations, and working with experienced sell-side advisors can ensure the negotiations run smoothly.
If you’ve decided to sell your business, hire an experienced sell-side advisor who can help you negotiate the sale and determine when you should move forward or walk away. The advisors at Symmetrical have decades of combined experience and will make sure that your needs are met. Contact us, and let’s get started.