CI RegentAtlantic Private Wealth Business Owners

Your business: what is your buyer thinking?

There are a number of psychological barriers that can interrupt your efforts to sell your business. Being a self-aware seller is important because it can improve the odds that your sales transaction will actually be completed. However, in addition to understanding your own mind, it’s equally important to be able to put yourself in your buyer’s shoes during a potential business sale. 

Why? Because if you can sense what your potential buyer is thinking—especially what they might be nervous about—you can often anticipate or respond quickly to those concerns. A calmer buyer is more likely to close a deal on terms that you’ll find favorable.

Also, qualified purchasers don’t come along every day. When you find a good one, it’s smart to hang on to them. Here are some idea to improve your odds of doing so:

Be as transparent as possible

Many buyers are worried about making a mistake when they buy a business. Any time you withhold information or appear to be doing so, you may raise a red flag in a nervous buyer’s mind. Better to give them information as quickly as you can and be upfront about any of your company’s shortcomings. You might not wish to highlight negatives, but they will likely come out during due diligence anyway. 

Be honest about past sale attempts

Did you try to sell your company before, but failed or changed your mind? Again, honesty is the best policy. Buyers are much more understanding if they know your history before they learn about it from someone else. Perhaps the timing or market conditions weren’t right for a previous sale. That doesn’t mean your current transaction will be a repeat performance.

Help them understand successors and minority owners

Give buyers detailed information about your management team and any minority shareholders—including employment agreements, compensation plans, career history and their post-sale growth potential.

These are the people your buyer will work with and who will help them retain clients over the long haul. It greatly increases buyer confidence to be familiar with their new team. Also, give your buyer direct access to your team—to ask questions, gauge their loyalty, let them explain your clients and work processes and more. 

Sell the sale to your successors

It can help build goodwill on both sides if you spend some time building up the positive aspects of the sale to your team. Find ways to help staff get excited about new opportunities that might be open to them and their customers after the transition. Also, if you need to incentivize key managers or minority owners to stay on after the sale, consider doing so. 

Maintain deal momentum

It’s easy for nervous buyers to let a purchase slip through their hands, simply due to inaction. They may stop returning calls and emails and essentially “disappear.”

We think the best offense is for you to keep the deal moving along. Develop and meticulously follow a schedule. Postpone your vacations and business trips, and work nights and weekends if necessary, to keep the information and paperwork moving forward. The longer the deal takes to complete, the less likely it is to actually close.

Remember: The buying process is stressful, too

You may stand to earn a nice profit from your sale. However, your buyer is investing a significant sum—and it’s possibly the first time they’ve ever done a merger or acquisition. If you can, try to be a bit empathetic if your buyer occasionally acts overly nervous.

Again, the more comfortable and confident you can help your potential buyer feel, the better your odds of closing a successful deal.

For more information about selling your company and evaluating the impact on your personal finances, don’t hesitate to contact your wealth advisor.


ABOUT THE AUTHOR

Brian Kazanchy, CFP, CFA, MBA

Brian Kazanchy, CFP, CFA, MBA

Partner, Wealth Advisor

With more than 20 years of wealth advisory experience, Brian Kazanchy directly counsels and advises clients on wealth management and financial planning. He has a particular focus on the unique planning and investment needs of Business Owners. He is credited with developing, implementing, and communicating many of RegentAtlantic’s investment strategies. Brian serves on the Firm’s Board of Managers.

In addition to being a Chartered Financial Analyst Charterholder and a CERTIFIED FINANCIAL PLANNER™ certificant, Brian holds an MBA with a concentration in Finance from Fairleigh Dickinson University and a BA in Finance from the University of Richmond. He also studied Finance abroad at the University of Warwick in Coventry, England.




CONTENT DISCLOSURE

This information is for educational purposes and is not intended to provide, and should not be relied upon for, accounting, legal, tax, insurance, or investment advice. This does not constitute an offer to provide any services, nor a solicitation to purchase securities. The contents are not intended to be advice tailored to any particular person or situation. We believe the information provided is accurate and reliable, but do not warrant it as to completeness or accuracy. This information may include opinions or forecasts, including investment strategies and economic and market conditions; however, there is no guarantee that such opinions or forecasts will prove to be correct, and they also may change without notice. We encourage you to speak with a qualified professional regarding your scenario and the then-current applicable laws and rules.

Different types of investments involve degrees of risk. Future performance of any investment or wealth management strategy, including those recommended by us, may not be profitable, suitable, or prove successful. Past performance is not indicative of future results. One cannot invest directly in an index or benchmark, and those do not reflect the deduction of various fees which would diminish results. Any index or benchmark performance figures are for comparison purposes only, and client account holdings will not directly correspond to any such data.

Advisory services are offered through CI Private Wealth and its affiliates, each being a registered investment adviser (“RIA”) regulated by the US Securities and Exchange Commission (“SEC”). The advisory services are only offered in jurisdictions where the RIA is appropriately registered. The use of the term “registered” does not imply any particular level of skill or training and does not imply any approval by the SEC. For a complete discussion of the scope of advisory services offered, fees, and other disclosures, please review the RIA’s Disclosure Brochure (Form ADV Part 2A) and Form CRS, available upon request to the RIA and online at https://adviserinfo.sec.gov/. We also encourage you to review the RIA’s Privacy Policy and Code of Ethics, which are available upon request.

Our clients must, in writing, advise us of personal, financial, or investment objective changes and any restrictions desired on our services so that we may re-evaluate any previous recommendations and adjust our advisory services as needed. For current clients, please advise us immediately if you are not receiving monthly account statements from your custodian. We encourage you to compare your custodial statements to any information we provide to you.