Letting go of your baby.

The sale of your company is a business deal, first and last. This is not a good time to let your ego get in the way. Save your feelings for your therapist.

Getting realistic about valuation.

By far and away the most common reason doable deals fall apart is over the issue of valuation. We will address this issue later in detail. It is worthwhile getting an independent valuation prior to listing the company, just as you would talk with a realtor or two before setting the price of your home. You would also want to get a sense of what similar companies are selling for, just as you would do comps on a home you are about to sell. Do your homework, and be prepared to have a serious discussion about the real value of your inventory.

Preparing for extra work.

Because of the amazing inefficiency of the market place, this process will likely take one to two years! You will need to make a plan for how you will respond to inquiries from potential buyers, how you will qualify them, how you will provide documents and negotiate, AND... run the business, without ruining the other part of your life (you DO have another life. Dont you, because of you dont it is going to come as a real shock when you have sold your company and no longer have a company to run).

Getting ready to deal with sellers.

Buyers will make a point of finding the flaws in your company. Learn not to take it personally.

Learning how to qualify sellers and share confidential information with them will be discussed in another article.

Who else do you talk with?

It is lonely at the top, no more so when you are trying to sell the company. The sales process is rarely disclosed even to senior management until the due diligence process is underway. The need to keep this secret can be quite taxing. Often the owner will not be comfortable discussing this with the firms accountant or attorney, although this may be ill conceived. Who will help with the strategy decisions, and will there be someone in whom you can confide?

What are your motives and goals? What are the company goals?

They may be quite different and it is important to be clear with yourself about this from the start. You have a duty to yourself, and you likely have a fiduciary duty to your shareholders.

With all the stories in the news about enormous CEO paydays for the CEOs of acquired companies, we believe that CEOs will be increasingly accountable to shareholders regarding their fiduciary duties. That said, CEOs and owners of middle market companies might have put the better part of their careers into the company. The value realized in an acquisition may be substantially due to the efforts of the CEO-owner.

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