Selling your business? Three things you need for the perfect deal
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Selling your business could be the most important decision you ever make, so you need to be properly prepared.
Every seller wants to get the best price for their firm, and they want to do this without any nasty surprises along the way. But there are also a few less obvious factors to consider which could help shape an ordinary transaction into the perfect corporate deal.
Here are three points to check off your list when you’re preparing to sell your business in order to ensure that you get the best possible results.
1) An organised deal executive
Any corporate deal depends on a steady and transparent flow of information between seller and buyer, and sometimes also in the other direction. Any potential buyer wants to feel that the seller and their adviser have up to date financial and management information at their fingertips and can answer all their questions comprehensively. This will give the buyer a sense of confidence and make it more likely they will invest the considerable costs and manpower needed to complete a deal. Delays or incomplete information could have the opposite effect.
To obtain the desired result, the deal executive has to be well organised, anticipating any potential questions and requests for information before they happen.
2) A sensible spread of risk
Distribution of risk is a key factor in any successful deal – the fairer the distribution of risk between buyer and seller, the more chance the transaction will complete in a smooth manner. Ideally, both parties will be able to look at the deal from the other’s perspective, encouraged by an empathetic deal adviser. Most transactions are very finely balanced between the two parties – if the seller is demanding a premium price for their business while a buyer is looking for a bargain, and each expects the other to take on the lion’s share of the risk, the transaction may not succeed. The deal handler’s role here is to push for a compromise, which may mean having difficult conversations with both sides to find a solution which suits everyone.
3) A relationship built on trust
Trust should be the foundation of the relationship between all parties involved in a corporate deal. This is sometimes easier said than done when the buyer and seller are strangers to each other. Ahead of completion, there may be conflicts where the two sides look to cement their respective positions. During this process, underlying trust between the buyer and seller is crucial. But equally important is that they both have trust in the deal executive who is advising on the practical aspects of the transaction, as well as the lawyers helping to negotiate the legal agreements. Trust is an aspect of corporate dealmaking which is often overlooked, but very important.