“We have the tools, and we have the talent.” Winston Zeddemore – (quote from Ghostbusters)
You have decided it is time to sell your business and you hear that you should have a deal team. So, “who you gonna’ call?” Do you think you can do it on your own or should you get help? Here is some practical advice.
I am going to suggest a solid deal team. However, please understand that the size of the transaction is going to determine what the team will look like. At this point, do not look at the individual players but the roles that have to be played. I have seen smaller deals done with just a good transaction lawyer and an accountant. But, before you go there, think of these roles:
- Investment banker – they are the “broker” in the deal and simply put, if you wouldn’t sell your house without a broker, why wouldn’t you have this role in the sale of your business? There may be “ugly” points that both sides have to make – having a pro as an intermediary really helps. One who knows your industry can be critical in lining up the right buyer.
- Lawyer – here there are two roles. The “transaction” lawyer who understands how deals are structured and the “estate” lawyer who will help make sure you get maximum capital preservation / tax efficiency for the next generation.
- Accountant – tax and deal structure as well as a trusted advisor who can help you quarterback the process. And keep in mind, it is a process. You also need someone to guide you on the due diligence the purchaser will want to perform. Trust me; the bigger the check, the more questions they will ask (see my blog on the Spanish Inquisition)
- Decision maker(s) – you need some governance around who is going to make the call when critical milestones come up. Concluding on the Letter of Intent (LOI), due diligence requests, negotiating offers. Put some governance in place before you start the process as decisions in this process are often time sensitive and usually emotional. Better to set this process when the cooler heads prevail.
- Financial advisor – someone to guide you on how to invest what you get from the deal. Keep in mind, if you are an entrepreneur, you are probably used to being in control of your economic freedom. You can raise prices, trim staff or do what you have to do to run your business. You are nothing but a minority player in the investment world and you need an advisor who can help you understand what this means.
You will need to spend some money and good deal professionals can also help you manage this spend. There are so many data points to consider; valuations, audits, stay bonuses, reward programs for key employees, etc. that it can be a bit overwhelming. So make sure you get the tools and the talent and your chances for a successful deal will be greatly enhanced. And keep in mind as Yogi says; “it will be over when it is over.” Good luck.