More often than not during the sale of a business, company shareholders will encounter crossroads – circumstances where difficult decisions need to be made with a high level of risk regardless of which direction they take. In this article, we provide an overview of some typical crossroad situations and how to navigate crossroads to ensure a successful outcome for a sale.
Typical Crossroad Situations
Picking a Final Buyer to Complete the Deal
The best company sales process are run in a highly competitive environment, with a number of interested buyers all competing to acquire the company. However, there will always come a point where the sellers need to select one buyer to run forward with to complete a transaction. See our article on Selecting the Right Buyer For Your Business for more information. This is often a difficult crossroad, as there are generally significant risks involved in the selection process, as selecting the wrong buyer may lead to poorer deal outcomes or even no deal at all.
Choosing How Much to Disclose
During the conduct of any sales process, disclosures regarding the financial and operational characteristics of the company being offered for sale are inevitably required in order to allow interested buyers to prepare informed, realistic offers to acquire the company. Challenges can arise however when determining what to disclose to whom. For example, what happens if there is a significant problem with the business that would likely cause buyers to devalue your company? Or what disclosures should you make to a direct competitor?
Navigating Crossroads
Take the Blinkers Off
When difficult decisions need to be made during the sale of a company, it is unhelpful to have tunnel vision. Tunnel vision decision making occurs when, by the grace of time, you forget or dismiss each step of the process that you have been through to date, and disregard all of the options available to you in order to resolve the hurdle. When you hit a crossroad, we find it useful to go back in time to where the sales process started – what outcomes where you looking to achieve and how had you planned to achieve them? From there, walk step by step through the process that you have taken to date appreciating the interactions that you have had with different buyers, and the decisions that you have already navigated. Then, look at your current decision with an open mind to the potential options available. Sometimes it is easy to become blind to simple solutions when the pressure is on to make a tough decision, so taking time to work your way through everything and consider every option can often make the decision making process easier.
Go Back To Basics
We find it incredibly useful to “go back to basics” when navigating crossroads. What do we mean by this? Essentially, remember what it is that you are trying to achieve (hint: it’s normally the sale of your company for the best price and terms). Often we see clients get so caught up in the process of selling their company and of managing the day-to-day operations of their company that they forget about the outcome they are there to achieve. Going “back to basics” often places everything into perspective and can make for more rational decision making.
Find Out More
At Quinn M&A our expert team of company and business sales advisors can help you with planning for the sale of your business and undertaking the sale of your business. Contact us today for a no obligation discussion with one of our team on 1300 784 667 or info@quinnma.com.au.
