In a perfect, Utopian universe, when we go to sell our business we find the perfect buyer and get 20% over our dream price and the process is done quickly and without any hard feelings. Everyone goes out after and celebrates with a 20-year-old bottle of scotch.
The reality is often far from Utopian, in fact negotiations can often get ugly. The key to surviving without an emotional breakdown is simple: Remain calm and try to put yourself in their shoes.
I know, it’s not easy. This is your baby you’re selling, and someone just called it UGLY (M&A terms for lowballing the offer.) If you can step back and be a fly on the wall, it’s just a negotiation, and some negotiators are nicer than others but indeed it’s just a transaction between 2 people. You need to try and keep the emotion out of it.
Here’s the deal:
• You and the “other guy” may have very little in common! They don’t think like you, act like you, etc. You have got to try and think like them though. You may also be dealing with a business unit leader or development department from a big firm or equity group.
• You are in different stages of life: You are dreaming of retirement, they are in serious growth mode – it’s about the dollars.
• You see your employees and team as family, they see the great ones as assets, the bad apples as serious problems. You may have turned a cheek or two at some less-than-stellar performances (because of the emotional family attachment) but they will have zero tolerance. Some won’t make the cut.
• Your clients are an extension of that family. To the buyer, they are a number and/or an opportunity for a cross-sell engagement.
• Any questions about your operations you take as an assault on your intelligence. They simply need to know why you do what you do and if it makes sense to them to continue down that path.
Here’s some strategies that will help – remember, get in their shoes:
1. Many buyers will act out of fear of loss. The same mindset that makes 3 am infomercials a success – it’s the Time Sensitive Offer. “Buy now or lose out.” Use that to your advantage by sharing alternative options that have nothing to do with them if they indeed exist.
2. Become emotionally ready to let go. One of the #1 reason most deals don’t close is because the owner can’t detach.
3. Create a buffer. Sure, you can sell your business on your own, but I can promise you most people regret it. When you “don’t know what you don’t know” there are always consequences, most of them severe. Work with a professional who understands the process that includes an M&A firm, an attorney who works in the buy/sell space, and an accountant.
In the end, it really is about the emotional separation. The buyer doesn’t think your baby is really ugly, they just need the facts in order to make a smart calculated business decision – no different than you would do if the shoe was on the other foot.