“I got my pilot’s license when I was 15. Not many women can say that. You could say I’m used to flying solo. Selling my business should be no different.”
Marcia (not her real name) is one of the most impressive ladies I have ever met. She called me at the urging of her financial planner because she is considering selling her business. As we chatted over lunch, I learned how she had taken over the business from her parents twelve years ago, and since quadrupled it in size. “I did things my parents would have never considered. I always had a higher level of risk than they did. Fortunately, most of those things paid off.”
Paid off, indeed. At age 52, Marcia has a business worth eight figures and she has a number of suitors ready to buy it from her. As we were finishing our lunch, I said, “Marcia, you have a great business, there are a number of potential buyers interested in taking a closer look. I’d love to represent you through the process. I know you’ll be pleased with the results.”
But I could see Marcia wasn’t ready to retain me, and most likely, not anyone else. She seems confident in her ability to figure it out as she goes. “Of course, I’ve never sold a business before,” she told me, “but I’ve seen other business owners do it, it doesn’t seem all that hard.” So I responded, “If you step onto a commercial aircraft, do you want a pilot who has flown before? If you ever have a need for surgery, do you want a surgeon who has done it before? Heck, if you go to the Apple Store to have your laptop repaired, don’t you want someone who has fixed one before?”
Marcia laughed, she said she appreciated the nature of my questions. “OK, I see your point, experience matters. You have it selling businesses, I don’t. But I honestly think I can do it myself. So let me think about it and get back to you in a few weeks.” “Fair enough,” I said, “but let me ask you one last question. Before you got your pilot license, how many hours did you spend in the plane with a trained instructor?” “Oh gee,” she said, “that’s a fair question, I’m guessing 80 hours, maybe more, and my instructor had been flying for 30 years.”
That conversation was two weeks ago, I haven’t heard from her since. I am not the type to bug people, I presume she’ll let me know when/if she is ready to retain me. Now, I know she can get the business sold doing it herself. But there are three reasons why doing it on her own probably won’t be optimal for her. First, it will be a huge distraction from running her business day-to-day. Second, if she doesn’t handle the multiple potential buyers the right way, she is likely not going to see the best price for her business. Third, and this is the one that business owners most often miss, negotiating the terms of a deal can be the difference between a great deal and a disaster. Price isn’t everything. For example, how much cash at close? How much has to be paid over time and what are the conditions of those payments? What are the seller’s responsibilities/limitations post-close?
You get the idea. Flying solo can be thrilling, but before you do that, you need hundreds of hours in the cockpit with a trained instructor. I will admit, selling a business is not brain surgery, nor is it as complicated as sending a rocket into space. But an entrepreneur usually gets only one shot to sell their business. For the life of me, I cannot understand why an entrepreneur would not do everything possible to stack the odds in their favor. Working with an experienced intermediary will more than pay for itself in negotiating price, terms, or both. When selling a business, flying solo might be thrilling, but it’s not optimal.
JIM CUMBEE is President of Tennessee Valley Group, Inc. a retainer-based business brokerage and transition mediation firm in Franklin, TN. Cumbee is an attorney and has an MBA from Harvard Business School. Jim is the author of Home Run, A Pro’s Guide to Selling a Business. https://www.amazon.com/Home-Pros-Guide-Selling-Business/dp/1599329239 . He has a wide range of corporate and entrepreneurial experiences that make him one of the most sought-after business transition advisors in the state of Tennessee. The principles above are true, but the story, names and fact patterns are changed to preserve the parties’ identities.
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