You’ve spent years, and perhaps even a lifetime, building your company into a success. So when it’s time to sell, you probably want more than just a good offer. You also want a deal partner who will respect you and what you have built. Yet, many owners get so caught up on issues of valuation that they can’t see much else.
The most attractive offers go deeper than price. Here are there traits of a compelling offer that have little to do with price.
Everyone wants to chart their own course and determine their own fate. Owners are accustomed to very high levels of autonomy. So the ideal offer is one that preserves or expands that autonomy—not one that makes the seller beholden to or subordinate to the buyer. Autonomy comes in many forms: an upfront payment that offers financial security, a share in the company that offers the owners some ongoing control, or earnouts that are clearly structured and that do not make unreasonable or unfair demands of the seller.
It takes years to build a successful business. Buyers must communicate their respect for the wisdom and skill involved in building a company. There’s an important lesson here for buyers who can’t pay top dollar, too: if you can convey respect to the owner and show that you truly value what they have done, your offer might suddenly be more enticing than a higher dollar one.
Entrepreneurs derive significant pride from building or creating their own company. Offers that offer recognition for what you’ve done, and perhaps which honor your company in some measurable way, are more valuable.
Everyone wants to live a life of purpose. When you leave your business, you may be leaving behind a significant source of purpose and personal fulfillment. You’re also fundamentally altering your role, and likely changing how you spend your time. So it’s important to consider whether the deal offers you a new sense of purpose, such as by giving you sufficient funds to pursue retirement dreams or allowing you some input into the new entity. In the latter scenario, ensure you have significant flexibility. After a lifetime of working for yourself, it’s highly unlikely that you’ll enjoy working for someone else.
Making the Decision
When you begin the M&A journey, it’s helpful to identify that which is most important to you. Sometimes this requires a lot of self-knowledge. Do you want to feel important? Do you want more freedom? What makes you tick, and what will satisfy your true, potentially unstated, desires for selling your business? There’s no wrong answer here. But honesty matters, even if your reasons seem odd, or do not make sense to others.
An excellent advisor can help you really hone in on your goals for selling your business, then help you compare offers in terms of which offer will most effectively help you achieve those goals. It’s never just about money, so don’t allow yourself to become blinded by dollar signs.