It’s not easy to have the tough conversations. But as business owners, we need the courage to confront problems, particularly when we see something that goes against our core values. Failing to address issue areas can lead to dysfunction, toxic work environments, and weakened business value.
In the world of mergers and acquisitions, tough conversations are vital. Whether we’re providing a business valuation or advising owners on the sale of their business, it’s essential that we tell clients what they need to hear, not what they want to hear, so they can make a well-informed decision. Which is what most find is the most significant financial decision they will make in their lifetime.
According to the Market Pulse Report, a quarterly insight survey into Main Street and lower middle market M&A, the number one reason businesses don’t sell is unrealistic expectations. Many businesses go to market overpriced because an inexperienced or unethical advisor has given them an inflated expectation just to get the engagement. Still other business owners put an arbitrary value on their company based on their own retirement needs or their emotional attachment to the business.
Let’s face it, it’s easier to tell people what they want to hear. No one enjoys delivering bad news. But if your advisors let you go to market with a benchmark that’s way above realistic market potential, they’re setting you up for failure.
Your business may languish on the market for years, while you lose focus and momentum. At best, you’ll lose time and money before you realize you need to accept a lower price. At worst, your business never sells, and you end up liquidating assets for a mere fraction of what a going operation could have netted.
I’m sure it happens in every industry. There are businesses who overpromise and those who are realistic about pricing, timeframes, and viability. Businesses who overpromise win work in the short-term but lose customer trust over time. Better to build a foundation of trust and accuracy, even if it means some clients walk away.
The same goes for our internal operations. Our employees need to trust that we’ll be true leaders, creating a comfortable work environment. They need to know we’ll stand up for them (and ourselves) when clients demand unreasonable deadlines or when our business partners try to change the terms of an agreement.
For the sake of our employees, our business, and our own well-being, we need to get better at having difficult conversations. Be objective and compassionate and try to understand the other person’s perspective. These aren’t hostile exchanges, but constructive conversations that should create value for everyone involved.
Our mothers may have told us to hold our tongues when we didn’t have anything nice to say, but sometimes the truth is necessary, even when it hurts. We need to get comfortable with being uncomfortable and have those difficult conversations when it matters.