You have spent years building a business, a brand, a reputation. It is not easy to part with this. Know that this is perfectly normal and you are not the only one. But the desire to leave the company comes from somewhere. Welllicht you have found a new passion or simply wish to retire and spend more time on hobbies and family. Whatever the reason, staying on when you would rather leave is not beneficial to anyone. It’s not fair to your staff, your customers, but most of all not fair to yourself.
You have decided to sell your business
Choosing to sell your business is a big step in itself. You have probably considered various options: transferring the company to (one of the) children, appointing external management and remaining a shareholder, or perhaps a management buy-out if there is already a management team in place. The thought process leading up to the decision to sell can be emotional.
How does the sales process work?
Once the choice is made, you need to find a suitable corporate finance advisor. This is also, beyond a ‘hard’ element such as pricing, location and network, largely a matter of feeling. In our experience, a sales process takes an average of 6 to 9 months and that period is very intense, especially towards the end. So it is very important that there is a click between you and the advisor. The working and negotiating style of you and the advisor must be well matched. That way, the cooperation remains good even when things get tough. And yes, it always becomes so during the process.
Stages in the sales process
A sales process has fairly well-defined phases, each of which has its own dynamics. The preparation phase (1) is relatively time-consuming for the client. A lot of information has to come to light in a short period of time in order to create a solid information memorandum. The market phase (2) is exciting in every process because it must reveal how much interest there is in your company. Once a suitable buyer has been found, the first negotiations (3) start, leading to an outline agreement as laid down in the letter of intent. This is an important phase in which the broad outlines are set for the rest of the process.
The due diligence phase (4) is an intensive process for all involved. The buyer and her advisors want to get a very detailed picture of the company in a short period of time. Sellers often experience this as overwhelming, mainly due to the amount of questions and requested information. Most entrepreneurs experience this phase as time-consuming and sometimes frustrating.
It is an interplay between buyer, seller and advisor at this stage to keep their noses in the same direction. Ultimately, they will have to work together toward the finish line. The buyer’s need to get all the details above water may be interpreted by you as suspicion or a way to change the price or preconditions. Whether or not this is justified, it is up to the corporate finance advisor to find a balance in this. A balance between, on the one hand, the duty to provide information to the buyer and, on the other hand, guarding the timelines, and atmosphere, of the transaction.
The intensive period of due diligence is followed by the contracts phase (5). Here, the previously agreed outlines and dedue diligence findings are further detailed with the help of lawyers. After the necessary mutual frustrations, signing the contracts at the notary feels like a light at the end of the tunnel. After an intensive period, it is time to breathe and enjoy the result.
Every corporate finance advisor at Florijnz is above average in all the emotions involved in selling your business. Have you had the sale of your company in mind for some time? Feel free to contact us and inquire about the possibilities.