It’s that time again. The time of the year when we are stretched to the max and feel like we are going to snap at any given time. A time when there are not enough pumpkin lattes and eggnog milkshakes in the world to help us get into the joys of the holiday season.
Instead, in the accounting profession, we are likely feeling the impending dread of upcoming 1099 filings. This year has flown by so fast, and it feels like there has been no time to catch our breath. There’s the realization that it is just about to start all over again, which is enough to make many of us want to throw in the towel for good—and we really mean it this time!
In my own experience, I have also noticed that this is the time of year when buyers like to start looking to purchase companies from business owners who are just at their wits’ ends. Poaching on the weakness of normally strong individuals tends to be a common practice for many buyers. If you are an overwhelmed business owner, we view the offers as compliments and take them with open arms. However, before you do this, let’s take a step back and evaluate the situation so that you don’t regret selling your firm in a moment of weakness. Instead, position yourself to sell when it makes perfect sense emotionally and financially.
Five important steps when thinking about selling your firm
These five steps are the ones I have used myself and when I coach clients on the “sell-don’t sell” dilemma. If you follow them, you will greatly increase the chances of getting what you deserve for the firm that took so long to build!
Step 1: Make a list!
Try to do this when you are not stressed out beyond belief. Do this when you are at a Zen place. Maybe after a massage or a meet-up with friends, or even at the park while your dogs or kids play. Write down:
- What amount you would want to consider selling your firm for? We all have a price. What is yours? Write it down. Don’t be embarrassed. It’s your number. Whether or not it is realistic is a different topic, but for this article, let’s assume you are in line with the market.
- What about your role? Will you stay on? Will you leave?
- How will you handle your team? Do they need a guaranteed job?
- Now think about your clients. Where will they go?
Maybe you don’t care about any of those details and want to focus on that number you wrote down and that is ok. This list is for you!
Step 2: Know your worth!
You built something. Something that has value and someone else sees the value in, that is why they are interested. What have you done that you think is unique? Is there a process? A format? Templates? Contracts? These are all worth money, and some companies spend thousands if not millions of dollars to come up with something you may already have in place. Don’t undervalue that.
Step 3: Be patient and don’t rush this process.
The dollar signs that are being flashed at you will cloud your judgment. Hire yourself an amazing attorney (don't worry, the buyer is going to pay for this retainer in the purchase, you’ll negotiate that) and get an advisor/coach or someone you trust that you can talk to candidly about this process that is not biased in any way.
More than likely, you will not have two feet on the ground. It will be emotional and you will just want it to be done with so you can move on to your next venture, so use this person as a crutch for common sense.
You can even hire someone and have that rolled into your purchase agreement as well. This person will be your lifeline during the process. Choose someone who will be available and candid.
Step 4: Don’t back down.
After 15 (or more) meetings with everyone involved, all of the compliments you received for what you built, and just the feeling of being on cloud 9 that someone actually wants something YOU created, you will start the due diligence process. This can be easy or rough, depending on how organized you are, but this is where the buyer will start picking you and your business apart to try to save some money.
Unless it is illegal or unfixable, it isn't a deal breaker. It is just a negotiation tactic. You already have your number. You wrote it down, remember? That’s your number.
Step 5: Plan for the worst and hope for the best.
I know, I know, we all wanted this article to end in sunshine and flowers, and I HOPE it does, but I am not PLANning on it. Do you know how you avoid that? Just remember these eight words: If it isn't in writing, it isn't happening.
I don’t care if you were promised by every single person involved that you will be crowned King CEO of the entire franchise they are building. If it is not in writing, it isn’t happening. When the ink is dry on this purchase agreement, the only thing anyone is legally required to adhere to is what is within it. If there is something that is important to you, get your attorney to add it. Also, just because you have great intentions does not mean the other party does, so be sure to read all the clauses as if they are planning for them to happen.
While I know this is a somewhat pessimistic mindset, which we typically leave to the attorneys to take on, being prepared for the worst-case scenario is what will get you through a successful purchase agreement with no remorse. It’s just temporary, and your glass can be half full when that ACH hits your account.
Business is business until it isn't. Your firm is like an appendage of you and it is very hard to let go of it. If you want my own very personal advice, here it is: Take a nice relaxing vacation PRIOR to entering into a purchase agreement, then when it is over, take another longer one. At the end of the day, your health and well-being are critical, so you have to make the decisions that are best for you, your family, and your life, whether that is to stay with your business and moderate your own participation in it to avoid burnout, or to sell it and move on to the next exciting phase of your life.
Wishing you truly happy Holidays!