A View of the Finish Line

Steps to Selling your Business Part 31.

Management visits are complete. You and your team of Advisors have stepped into the third and final phase in the sales process. Congratulations!

Phase One – Preparation: you have provided your advisors with all the information needed to tell your business’s story. Phase Two – Market Outreach: all the best buyers for your business were found, and after signing a non-disclosure agreement, heard your story and saw the company you built.

Phase Three—Closing the Transaction

Take a deep breath, pour yourself a congratulatory glass of wine, and prepare yourself for what’s coming next. This phase moves fast and requires a lot; you need to be ready.

In this post, you’ll find a summary of what lies ahead within this phase; the finish line is very close. In subsequent posts, I will dive in for a closer look at the particulars. There is much work here for you and your Advisors, and we’ll want to examine each piece in greater detail.

Everything you need to accomplish takes place in three actions. I say actions because our goal, in each case, is to move the slowly materializing transaction one step closer to closing.

The first action begins when prospective buyers submit a Letter of Intent.

Your Advisor’s job is to help you navigate with skill and wisdom from multiple offers to selecting the buyer with whom you will close a transaction.

It is a significant moment: a wide net is cast during the Market Outreach Phase, and that net has returned with several high quality buyers. If you have been working with the right M&A Advisors, you will have ‘caught’ the right buyers.

The goal now is to select the absolute best buyer and negotiate the best value and structure with them.

Thus the second action begins; you commence your first round of negotiations with your best buyer.

Not everyone is a good negotiator. This is where you need the absolute best M&A Advisors – the ones who have been there, done it, time and time again. For your sake, make sure your Advisors are expert negotiators. These negotiations propel you through to signing a detailed Letter of Intent.

The third and final action consists of Due Diligence.

Due diligence is the buyer’s deep dive into the foundations of your business. Every unturned stone is inspected. This phase is all about motion, but unprepared sellers can find themselves at a dead halt instead. Your choice of M&A Advisors makes all the difference.

Stillwater’s team is meticulous in the initial preparatory phase because it makes the due diligence process relatively painless and keeps the whole process in motion. Your buyers won’t waste time on unturned stones when they discover that your Advisors have already flipped them over and properly contextualized them.

From here it is the push through due diligence to your final goal: a purchase agreement with all the terms and conditions, representations and warranties negotiated and in place.

After that, all that’s left is the finish line. At the beginning of the process, it may have seemed a hazy, abstract goal. Now, it is concrete—a date you can mark on your calendar. That’s the day that papers are signed, funds are transferred… and the day you’ll go home knowing that you are beginning a new chapter in life.

What you do then is up to you. Our job as your Advisors is to get you there with every resource you need to do it well.

If you are planning to divest your business or have questions for one of our Advisors, please contact our team today.

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Written by: Douglas Nix