The End-Goals of Management Visits

Steps to Selling your Business Part 27.

Before we move on to the next step in selling your business, I want to take a moment to consider the end goals of Management Visits.

The first is to thin out the pack of prospective buyers.

After these meetings, the people you move forward with will be final contenders. It will require an experienced advisor to help you choose the people you want to focus on and graciously step away from those you don’t.

During management meetings, you will have spoken to the future owner of your company. Focusing on the candidate who will one day close the deal is as critical as focusing on what candidates you need to lose along the way. You will sometimes part ways, rather quickly, with some prospects over money and often with other prospects because of fit.

Sometimes the buyer candidate won’t see the fit. As your shield of privacy lowers during these meetings, and they get a clearer picture of what you’re selling, they may see reasons to exit. Your company’s direction might clash with their long-term goals in a way no one had anticipated or a risk that your business carries might trigger a non-negotiable “no thanks”, and they’ll walk away.

It could also be you who doesn’t see the fit. There may be clashing business principles behind this, or the reasons may be entirely personal; whatever the case, your advisors are there to coach you through and support those decisions.

Our second goal with Management Visits is to begin building the foundation of a healthy relationship with the final buyer, even though we haven’t yet fully identified them.

Experience has taught me that this is best accomplished by building a functional working relationship with everyone we meet in the process, and then letting facts and fit determine who stops and who continues.

During early meetings with our final buyer, we optimize conditions for going forward and begin early negotiations.

As I’ve previously discussed, your M&A Advisors oversee the meetings.  It’s here that any tensions that surface are identified and neutralized. Humor, humanity, and respect are the dominant tones of discourse. I think this is the best way to do business with anyone, but the benefits, in this case, are apparent. Discussions only (and quickly) get more pressing from here; setting the right tone now makes our job at closing exponentially easier.

I’m a big believer in front-loading as much of the critical negotiations in a deal as possible. Once you have completed the preparation work, you want to negotiate early.

That is not to say that Stillwater doesn’t negotiate the fine points of the best deal for our clients right to the end, but the early negotiations are intended to work powerfully in their favor.

We are looking for every opportunity at these meetings with each candidate (one of whom is your final buyer) to get necessary negotiation points revealed, discussed, and, if possible, settled now rather than later.

When management visits are handled well, two crucial things result; a negative – we further discover who is not the ideal buyer for your company, and a positive – we lay the groundwork for a healthy relationship with the eventual buyer. This is when the tone for the rest of the buyer engagement is set, and that tone will make all the difference.

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