Great Expectations

Great Expectations

So, you have finally got your lifetime’s achievement to the point of getting to market. The past 12 months or so have been a blur of meetings with your accountant and your appointed business broker, perhaps interspersed with some consultancy, tax planning and legal advice. Not to mention the mounting fees but in the greater picture of what’s about to come to you, it’s not an issue and you are for once more than happy to pay these bills.

Let’s get one thing clear form the start. It takes time to sell a business, typically the best part of a year but don’t think that it can’t take even longer. It’s the nature of the beast.

Let’s reflect on what could well happen to YOU.

The broker markets your business, discreetly of course, and within a few weeks prospects dribble in. Seven expressions of interest – not a bad start but remember that this is a numbers game and the funnel has a very wide opening.

After a few phone calls and emails to and from 4 of the original 7 drop out. Why?

Typically some firms reply to absolutely anything and everything because it suits their business model and they are not timewasters but simply cast their nets wide. One is seeking a distressed sale and your is most definitely not. The other simply blasts a message that they will pay more than any other offer, which means they are not serious. So now we have 3 punters left and they sign the NDA. Following some more calls and checks by the broker he or she feels that it is time to progress to meetings.

As if you have not had enough of meetings in the past 12 months but now we’ve “upped the ante” because the hidden message contained within a request to meet is that if you are a timewaster please don’t bother.

Three meetings tomorrow, looks like we’re home and dry. Not so!

Each meeting goes well and within 3 days you have 3 offers. One really juicy one 15% above your target price, one bang on and one 30% below. No matter, they are serious, have funds and a reason to do the deal.

More time passes and you choose the highest bid as all that separates them form the rest if money.

Heads of terms are drawn up etc etc etc and due diligence commences.

All the time and money invested in the past 12 months is going to pay off because you know everything is in order.

Everything is going swimmingly and you can almost smell the millions in your bank account as you look forward to spending time doing all the things you never got around to in your spare time.

One week to go until the draft contract arrives at your solicitor.


Your buyer is critically injured in a cycling accident.

What now? Walk away from her and go to one of the other suitors – crass and insensitive, and after all they will hopefully recover and continue. Tough call, so you sit it out until 12 weeks pass and you realise they are not going to be your buyer.

So back to offer #2 . We’ll explain everything and they’ll surely understand. Of course they do, they heard about the crash in a trade journal and even sent a “get well” card. Actually, they have lost interest because they family have approached them to buy the business as the director is unable to return to work. A nice price with an earn-out. Ideal.

But it’s worse than that. Because your nightmare has only just begun. The new combined firm is a major strategic threat to you and everybody knows it.

So you go back to the lowest offer and they tell you they will chew it over. What does this mean? Will they sell out themselves to the new combines firm or try to get you on the cheap and fight It out in the changed market landscape. After all, it’s a niche sector with only 11 players in the country.

Depressing reading? We haven’t even touched on how your health is being affected by the tension, both form the last man standing’s position and at home.

Finally the letter arrives – a real letter so it means they are serious, your solicitor tells you. A deal within 3 months, all cash no strings attached. And the offer price…. I think you get the idea of this story. I haven’t narrated it to depress you but to make you be aware of how “stuff happens” and that you need nerves of steel and strong family support before starting the process. As the Met Office weather warning says…”BE AWARE”

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