A very valid question that we’re asked at nearly every exit planning meeting we conduct is this:
Of course the answer to this is the age-old adage: It Depends!
Not to sound too crass, but the response is really true in this case. The successful sale of any privately held company depends on so many variables, and these variables can add time (or subtract time if planned for) that making a blanket statement to answer this question difficult. This is especially true during the time of economic challenge we are currently facing. Even though deals are still closing, because of uncertainty, due diligence is simply taking longer than normal, especially for those business owners that are unprepared for the questions buyers are asking right now, especially as they relate to EBITDAC!
However, having said that, we estimate, based on our collective decades of exit planning experience, it will take from 9-14 months and 1,000 hours of your time to exit your business using the professional M&A process like the one used by Generational Equity. Again, this time span will vary now because of our current economic uncertainty. But ASSUMING we begin to return to economic normalcy sooner rather than later, the age old issue that impacts the time equation (and this is true if you go alone or if you hire an advisor) is this:
One of the reasons professional buyers like working with Generational Equity is that they know our clients are true sellers. They are not in the market, “kicking the tires” just to see what offers they might get.
A quasi-seller using this approach is a colossal waste of time for buyers looking at the deal. Most have a limited amount of time to spare looking at each possible transaction that comes their way. Spending 3-6 months pursuing a seller, especially if due diligence is started, only to have the seller back out, is a disaster.
You Are A Seller!
But let’s assume that you are truly a dedicated seller so we can get over that time hurdle. Other time-consuming parts of the process that you will most likely have to farm out to various professionals include (again, assuming you are moving forward without hiring an M&A advisory firm):
Each of these is a skill set unto itself. Unless you have sold a business or two on your own already, or if you are a true renaissance man (CPA, research guru, experienced sell-side deal negotiator), you will need to hire three separate teams to guide you through these steps. This will, of course, add time to your exit window.
First, while successfully running your company, you will need to research and hire an experienced CPA who has done financial recasting for M&A processes before. This is usually NOT the accountant that does your taxes every year. Recasting is an art and a science and requires experience to ferret out every possible recasting item to your benefit. To learn more about recasting, read our post on this topic:
Secondly, you will need to find a business research professional that has experience in creating buyer lists that are both targeted and broad (a difficult proposition indeed). In addition, this person will need access to all of the research tools available that are used by M&A analysts who create buyer list. This is very important. Make sure this person, especially if they are affiliated with your industry association, is simply not using the same list over and over again for every engagement.
Finally, you will need to hire an experienced M&A attorney who can protect your interests during the vital deal negotiation process. It is critical that this person be an M&A-focused attorney. Although non-M&A attorneys can be used, they often have a steep learning curve when it comes to the intricacies of closing deals.
Of course if you don’t have the time to research and interview candidates for each of these (and we suggest that you get at least three detailed quotes for each), you can save some time and money in the short term by:
These will save you time and money in the short term, but could end up costing you millions in a failed transaction, when hiring a professional team can handle it all for you. This again, is especially true in today's economic environment.
If I Could Save Time in a Bottle…
And one time-related issue we have not discussed yet which is probably the most paramount is that, while doing all these steps effectively, you must also continue to manage the company so that the business is on track when you are negotiating with buyers.
And here is a really important point we have to make about time: The sooner you start the exit journey the better. Certainly today's daily news is upsetting and is causing many business owners to pause their exit plans. However, since it takes 90-120 days to simply do the initial phase of the process (which should include a full evaluation of the business including the COVID-19 recasting mentioned above) starting your journey today may in fact put you in the market at the same time our economy is entering full recovery after the pandemic is winding down. Now we cannot predict the future; however, if the experts are correct and sometime in mid-summer the economy fully re-opens in most areas of the country, starting your process sooner rather than later could be a great idea.
We have never met a business owner who regretted starting to prepare for his/her exit too soon!
For better odds of success (and to retain your sanity/avoid marital and familial strife), we recommend that you hire an M&A advisory team to guide you through this journey. Fortunately for you, the leading exit planning firm for middle market business owners is here to help. We have taken Wall Street financial processes and successfully applied them to Main Street businesses for years. Our track record speaks for itself:
The real answer to your question about time and selling is this: The length of time it takes is directly related to how prepared you are at every hurdle in the process. If you are going too piecemeal it by hoping to save money and use subcontractors at every step, it will end up taking you longer. As Kurt Vonnegut so aptly described it, “In this world, you get what you pay for.”
If you want top-flight exit planning advice, and the benefits they accrue, give us a call! This is especially true now in the uncertain economic times we find ourselves in. Now, more than ever before, having sound, professional exit planning guidance is vital to your success.
Carl Doerksen is the Director of Corporate Development at Generational Equity.
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We are extremely pleased with the way Generational Equity handled the sale of our company. Your associates, Tom and Chris, did an outstanding job of getting us (me) through the process.Michael J Polarek, President, Paragon Packaging
We knew it would be a difficult task to have someone really understand our business and our market, prior to researching a possible buyer, so it was imperative that we found someone of your caliber, with definite proven experience in this area.Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).Bil MacLeslie, CEO, ipHouse
The process was much more involved than I expected and your help, experience and advice was a big factor in making the negotiations go as smoothly as possible.Terry D. Wickman, President, Keytroller
I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.Bil MacLeslie, CEO, ipHouse
The help you provided us during each step of this process made us feel very comfortable and confident we were selecting the right approach to transition our Company.Andy Graham, Vice President, Modern Heating & Plumbing
We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
We thank you Eric and Generational Equity making our dream come true.Larry Moore, Owner, A Company Portable Restrooms
I must say that I have never worked with a more driven, competent and focused individual as Don Ho.Jay Dinnison, Owner of Sharpe Mixers
I am pleased that I was able to work with Andrew Byrd throughout this experience. From the first meeting we had in Minneapolis I felt that I was in good hands. His knowledge and expertise is second to none. He guided the process consistently throughout. I feel lucky that I was pared with Andrew and could not be happier that I chose Generational Equity to handle this major life event. Thank you Andrew and GenEq for everything!Eric Erlandson, Owner, Action Fastenings, Inc.
Thanks again Phil and feel free to have a future client call me if they would like a referral. You are a true professional!Andy Graham, Vice President, Modern Heating & Plumbing
I quickly recognized that Don was working for Sharpe Mixers above all else, and held our interests above others.Jay Dinnison, Owner of Sharpe Mixers
T.D., thank you so much! You are a great leader! I love how you are using your gifts and talents to better others. You are clearly a GREAT COACH! This 3 day session undoubtedly changed the future of our business, and very well may have been the sole catalyst to save my company, my health and my marriage! A genuine “thank you” from the bottom of my heart.Bryan D. Horn, Owner, Over Under Clothing
I need to say an immense thank you to Don Ho for his stellar work ethic, attention to detail, and tireless effort. Also thank you to the whole crew at GE! Without you, Don could not do such a phenomenal job. We were shooting for closing and funding before the end of 2020, due to the uncertainty of the political landscape and taxes. I am happy to report we closed last week and will be funding tomorrow.Dr. Caty J. Catron PhD, RN, VA-BC – Owner, Vic The Picc, LLC
Thank you again for all your guidance and support. Any company will achieve what they intend, if they have you on their team!Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
Dear Chris and Andre, I just wanted to say thanks for all your help. Even though this process was not an easy one, it was comforting to know that I had a capable team standing beside me. You made me feel like we were almost your only client or at least the most important one. Thanks again, and I will recommend your service in the future.Shenille Engelhart, Owner – CLS Technology
Generational Equity’s assistance was invaluable in compiling and marketing our business.Bil MacLeslie, CEO, ipHouse
We will highly recommend Generational Equity and Musa Jagne to any business owner about to embark on the same process.Karen S. Williams, CFO, BW Manufacturing
I wanted to write you a quick letter to express our appreciation and our delight on the outcome of helping us through the process of our recent sale. We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.Terry D. Wickman, President, Keytroller
Michael worked tirelessly, He followed every lead meticulously and urgently to make sure nothing was missed.Robert Evans, President and CEO of Mealtracker Dietary Software
I couldn’t have asked for a better team than Michael and Deborah. We couldn’t have done it without them.Robert Evans, President and CEO of Mealtracker Dietary Software
Tom Staszak is one of the most professional people I have dealt with in my last forty years of business. You’ve got a great group of people and you have built a truly professional organization.Michael J Polarek, President, Paragon Packaging
We were happy to see the interest in our company and what we cherished has not just a valuable company but an important company to the communities we served in.Larry Moore, Owner, A Company Portable Restrooms
Greetings Mike. Thank you for the captivating and compelling presentation you made at the Phoenix presentation last week. Over many years in business yours was the most informative and well-presented presentation, on any subject, that I have ever attended! Your energy and enthusiasm combined with your concise and captivating support of your positions with easily understood examples and data was compelling.Pete L.
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.Ralph Noblin, President of Noblin & Associates
Bruce and I wanted to take this opportunity to thank Generational Equity for assigning Musa Jagne to our transaction. In Bruce’s words, “Musa did one hell of a job for us!”Karen S. Williams, CFO, BW Manufacturing
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