Looking to Exit? How to Smooth Out the Sale Process

“There are emotional aspects to this and they don’t tend to go away” during a sale, Stahl said. “The complexity continues to grow and it’s not just financial or tax-related. There are family dynamics and values to consider.”

For instance, Stahl said, some owners can struggle with the idea of passing on parts of a sale’s proceeds to their children even if that brings with it tax advantages. Or consider the scenario where an owner decides to place certain interests of the business — its real estate holdings, for instance — in a trust to avoid steep estate taxes. There’s both a finality to that and the fact that a valuation of those assets will produce a discounted value because that stake won’t have voting rights.

Things don’t get easier as the process moves forward. Stahl said receiving a letter of intent from a possible buyer can be rough for sellers, both because it suddenly makes things even more “real” and because it’s likely to be a number the seller may take some exception to.

“Plus, pretty much the only thing that happens from there is the buyer beating it up,” Stahl said of that first set of terms.

All the more reason for sellers to work through their non-negotiables and priorities well ahead of time and to lean on the teams they’ve assembled to contribute calmer perspectives.

Watch the chitter chatter

It’s an evident point, but one worth reinforcing: While you’re building your plan to sell and as you go to market, keep your cards close to your vest to avoid potential disruptions. Set clear rules and parameters with your advisors and key executives regarding communication, such as an “eyes-only” policy that limits emails and letters, since others in your organization may be part of processes that handle them. And think ahead about where to meet with advisors and representatives of potential buyers; parading a bunch of suits through your offices or plants will naturally set tongues wagging and cause time-sucking distractions.

In short: Things need to look like business as usual until you’re ready to more broadly announce news.

Be prepared for changes

Even putative sellers who have put in the time to set up a great plan should expect curveballs as the sale process starts to progress. Stahl said those who have things 80% buttoned up have done “an amazing job.” The reality is that any plan uses a basket of assumptions — about deal structure, valuations, a timeline and more — that will run headlong into the reality of offers, counters, negotiations and other factors.

That’s why it’s important to remain grounded in your plan’s personal and professional priorities while acknowledging that you’ll need to rework some things or altogether give up other elements. For instance, Stahl said, a prospective buyer could emerge as a great fit for your organization’s team but ask for a greater share of sale proceeds to fall under earnout provisions than you had planned for. Or a bidder hits your financial target but wants you to stick around longer than you might like to guide the transition.

In this part of the process — and really, at every step along the way in selling a business — Stahl said it’s important for owners to remain true to the passion and knowledge that helped them grow their organizations in the first place. At the same time, they also need to rely on their long-term vision and the care for people who helped build the business that helped them reach this landmark. As with so many things, getting that balance right will best serve the greatest number of people over the long run.