Setting the Pace for a Sale

Steps to Selling your Business Part 14.

“How long does a sale process take?” an interviewer recently asked me. I answered, “that depends on how far back you want to put the starting line.” 

So far in this series, we have focused our attention on the initial steps and work (Preparation) within the three-stage process of selling your business:

  1. The Preparation Phase
  2. Market Outreach Phase
  3. Negotiating the Deal

As we turn our attention to the Market Outreach Phase in the coming weeks, I hope that I am leaving you with the understanding that the Preparatory Phase is critical.

Getting ready for a great sale is about more than getting the correct numbers down in your reports—it’s much more personal than that.

What did it take to get you here? What did you build or strengthen in your company before you decided to sell because you knew it would be necessary when you faced the market? Are your family members, your business partners, your spouse on board? Are you fully committed?

How long does all that take?

If we start the clock at the first moment you said to yourself, “it may be time to sell the company,” the answer might be measured in years, months, or weeks.

As an aside, we engage with many clients for months or years before they enter a sale process. We do this because we have some value maximization strategies for clients that require several months to implement.

Whatever the timeframe you take, getting yourself and your business in shape for sale is time well spent.

However, once a formal sale process begins with your Advisor, the speed of the process may surprise you.

Consider just the preparatory phase—in weeks past, you’ve read in detail about the effort required to set yourself up for a successful sale. It’s a massive undertaking with many moving parts, so you might understandably assume that it will take an equivalently large chunk of time to complete.

At Stillwater, we target 3 to 6 weeks for the Preparatory Phase, beginning to end. 

Every client is unique, and there can be factors that will potentially stretch that timeline, but that’s our goal. Shouldn’t it take longer? It takes effort and coordination to get things done in that timeframe, but there are good reasons for speed.

First, we want to protect you from Deal Fatigue.

Selling your company is a demanding process. No matter how long or short the timeline, it will tire you out. A benefit of working with experienced M&A Advisors: we’ve run this race before, and we know what this process is like; you can trust our expertise. Your energy level is going to have an impact on the deal you walk away with at the end. Spend too long on the first mile, and you may find yourself lacking at the finish. We can help you set the proper pace.

Second, the sale process demands a singular focus. 

You won’t be spending many mental calories on innovations within your company while you’re making your preparations. Of course, you’ll keep things humming along nicely at work throughout, but it’s not going to be a season of big moves buying a new factory or visioning new tech enhancements for your line. 

The sale process creates a level of pause in your company’s routine. 

I don’t think it’s healthy for your business to be in that ‘on hold’ mindset for too long. Better to keep the process moving and your company’s vital signs healthy.

We keep the preparatory steps as quick and lean as we can while still being thoughtful and thorough. One way that the wrong sort of M&A Advisors get through this stage quickly is by skipping the critical parts that demonstrate and capture the real value in your company.

Our approach at Stillwater is different: our experience allows us to get much preparation done in a short timeframe. We frontload a significant expenditure of energy to start the whole process moving at a healthy pace. This means having entire teams deployed to your case at once, not just a skeleton crew. We implement methods built to work efficiently, leveraging technology to interpret data in a short amount of time while ensuring experienced professionals set the pace so that nothing is missed.

The only variable that slows this part of the process is how quickly you provide us with the information we need. 

We have had many new clients expect that selling their company for the price they want will take a long time, even 2 or 3 years. That’s far too long. In normal conditions, the sale of a company, done well and with integrity, can be completed in as little as 4.5 to 6 months. If it has already taken you years on your own or with another Advisor, please talk to us; something is wrong.

Next week, we shift our attention to the second phase of the selling process—Market Outreach. Are you ready to discuss your business with prospective buyers?

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