Attendees at our exit planning conferences often ask us: “What is the most important strategic issue I should address in order to sell my company for maximum value?”
Of course at that point, without a full evaluation of the business which is the first step in our process, we really can’t answer that question, since what each business owner needs to do to create a “buyer ready” business varies from company to company.
However, in general, there are a number of reasons why transactions fall apart, why buyers walk away from opportunities (and sellers too). The key issue to realize is that buyers have an abhorrence to risk. The higher the risk perceived in your opportunity, the greater the chance that it might fall apart.
So here are a few reasons why deals tend to fall apart:
The good news is this: With a little guidance from a professional M&A firm, and some hard work, any and all of these can be overcome as you create a “buyer ready” business – one which is considered acquirable because the risk has been ameliorated.
So if you look at this list in relation to your business, do not feel despair if you have a few of these items checked off. The first step in creating a buyer ready business is to realistically look at what you need to improve. However, we find that this first step can be very difficult for many business owners for several reasons.
First, you are too immersed in the daily operations of the business to realistically evaluate the company. One reason Generational is so successful in closing deals for our clients is that before we take any company to market, we conduct a full evaluation of the business.
Then, based on that evaluation, we come up with a roadmap for enhancing value that the owner can implement immediately to begin improving the salability of the business. We find that this helps us close optimal deals for our clients even if they are implementing value-enhancing strategies while we market the company.
In addition, even if you have the time to objectively review your business, since most business owners have little to no experience in exit planning, far too many have no idea what to work on to make the business less risky to buyers. In fact, far too often owners implement the wrong strategy in hopes of improving the salability of the business.
This is why we believe that the primary reason deals fall apart is due to mistake number two listed above: Not hiring M&A professionals to guide you.
If fact, one could argue that making that mistake could eventually cause you to make all the others. For example, without professional advice how will you ever know the true value of your business and what deal structure is best for you? How will you address any historic declines in revenue/profits? How can you create accurate and meaningful documentation?
All the issues above could arise without the help of an M&A professional, causing your deal to fall apart!
This is something that you don’t want to happen at the 11th hour of any buyer negotiations. Not only can it be emotionally devastating to you and your family, but it opens you up to a whole host of potentially negative consequences that you want to avoid at all costs.
That is why we recommend to business owners that the very first step in selling your business is hiring an M&A firm to represent you. Without this guidance, you will have a real challenge in addressing the risk in your venture and building a buyer ready business.
And here is more good news: Generational Equity is ready to guide you on your exit. Keep in mind that any type of exit is truly a journey, NOT an event. As with any journey, preparing in advance is vital. Hiring our firm can help you address any and all risk factors and prepare both your company and yourself for an optimal exit.
Our journey with you begins when you attend one of our complimentary exit planning conferences that we hold throughout North America on a regular basis. Or, to learn more about all the services we offer, follow these links:
Carl Doerksen is the Director of Corporate Development at Generational Equity.
© 2021 Generational Equity, LLC All Rights Reserved
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.
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
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
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
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).Bil MacLeslie, CEO, ipHouse
We thank you Eric and Generational Equity making our dream come true.Larry Moore, Owner, A Company Portable Restrooms
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
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
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.
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
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 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
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.Ralph Noblin, President of Noblin & Associates
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 would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.Bil MacLeslie, CEO, ipHouse
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.
Generational Equity’s assistance was invaluable in compiling and marketing our business.Bil MacLeslie, CEO, ipHouse
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.
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
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 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
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
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
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
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