For many business owners, exiting their business can be one of the hardest decisions they ever have to make. The decisions that go into the process seem endless. What type of sale should they be pursuing? Do they want to remain at the company in some capacity? How can they protect their employees? What price can they sell for?
An M&A Specialist can help answer these questions and anticipate others that will come farther down the road. The key is finding an M&A adviser that is the right fit.
How does Chapman Associates build a productive relationship with a business owner?
We need to win your trust and this takes time. Your business is your baby. It’s your blood, sweat, and tears that have been sacrificed to build the business over many years and we need to earn your trust before being allowed into the inner sanctum.
Everyone does it differently. We ask questions and do a lot of listening. Good advisers listen more and talk less. It means focused, intent listening. Everyone is super busy today, but nothing beats looking a person in the eye and reflecting on what they are saying. We want to be a resource for you. We ultimately develop a relationship based on understanding the end result that the client wants. Advisers who just want to sell another engagement, are doing themselves and the client a disservice. Chapman works only for success fees ensuring that both parties goals are aligned.
Clients often learn the most about their advisor when the going gets tough versus when they are going well. Chapman Associates has consistently performed well in good times and bad.
What is the most important role the M&A Specialist plays in the sale process?
We play the role of financial advisor but also psychiatrist. Selling your business can be a once in a lifetime event and is often an emotional rollercoaster. There is an art to being empathic and understanding. It’s not always about getting every last dollar for the business. There are other critical variables that come into play and it is more important to find the right solution for all parties. We learn the owner’s financial and personal objectives and the legacy they want to leave, what they want for their employees, and any other critical concerns. We customize our process to fit the sellers ‘objectives.
A lot of owners are used to running a business a certain way and the potential investor may have a different view or they could look at different aspects of the business in a different way. Having an adviser that can help you understand how an investor might look at a business is so important. It’s not that one is right or wrong, but it’s about seeing the business through a different lens. We help owners understand the things that a new partner or owner will look at and help them understand why those things are important.
We also help owners through the emotional part of going through a sell-side process. They have to be ready to potentially hear some tough things, and that’s not easy. We also help them understand the next steps: if they are staying on, is there a personality fit, do they want to stay invested, and more.
What are some of the common issues you run into?
Very few business owners want to spend time with M&A Specialists for various reasons and so they often come in guarded. You can earn credibility by being honest and talking about things owners don’t necessarily want to hear. Sometimes those conversations don’t end well, but this is a long-term game and you build credibility by conducting yourself honestly and consistently.
There can be a hesitancy to run a sale process for a variety of reasons. The common psychology is to procrastinate and unfortunately often it is too late by the time owners finally decide to sell. The best time to sell is when a business has an upward trajectory and there’s a runway for growth and a reason to be optimistic. But that is a hard to time to walk away. A lot of owners can’t, and they stay on too long and they end up going to market with a challenging story rather than a growth story.
We talk with a lot of owners who have sold and then are sorry they didn’t do it sooner. After they finally let go, they discover that there is life after a sale.
Is it harder to sell to private equity or a strategic buyer?
A lot of owners are sensitive to engaging with strategic or industry buyers depending on how close they are to competing against them. We just worked on a sale whereby the buyer was a well-known, larger competitor of the firm. The seller was very reluctant to open his books to the competitor. Ultimately such hurdles are overcome and the larger objective was met; the Company was sold and the seller achieved his goals.
What should business owners be on the lookout for?
Every founder should be really tuned into the adviser that will be working with them. Chapman Associates has a consistently strong team from top to bottom. We show our potential clients the entire team they will be working with so there are no surprises once we are engaged.
