Beyond the process:
how people make or break a deal
Mark Steinhardt, Executive Director - InterFinancial
All too often, the process of selling a business is seen as just that – a “process”. Creating an Information Memorandum, financial
modelling, Due Diligence, legal documents. These are all crucial steps, but what differentiates a good “process” from a well-planned,
well-executed business sale? The simple answer is people.
With people at the heart of every business sale, it helps to think about the people you’re likely to deal with, and what’s driving their behaviour:
1. You / your fellow shareholders.
Selling a business is emotional. Many owners see their business as an extension of their personal identity. So, making the decision to sell can be a stressful, confronting, and emotional process. It’s important to have a clear view on what your objectives are and importantly to:
- Differentiate between personal and business objectives
- Identify your must-haves and your nice-to-haves
- Understand what this looks like for all shareholders
As you go through the process, remember that it’s not personal, and have someone else do the negotiating for you – it’s almost impossible to take the emotion out of those conversations.
2. The counterparty
Likewise, it’s important to know who you’re dealing with. What are their motivations? What can you learn from the other transactions they’ve completed? If you can match your needs from a commercial viewpoint, the pricing and other terms become much easier to agree.
3. Your employees
Your people love you and want you to have a great outcome. But they also care about their careers and putting food on the table. It’s crucial to consider the impact of the transaction on your employees – what will their roles be post-transaction, is their job secure, is there cultural alignment between the businesses? Our advice is to keep the circle as small as possible for as long as possible, then have a comprehensive, transparent communication and integration plan.
4. Your advisors.
Most importantly (of course!!), you need to surround yourself with experienced, trusted advisors. People who have done this before, are fun to work worth, and people you know will “have your back” no matter what.
Selling a business is hard. But understanding the people involved and their likely motivations will go a long way to improving your chances of success.
“Selling a business can be a wild ride and celebrating the people involved is an important part of the process. Here we are celebrating with the Venlo team after they divested part of their business to Clarus Corp recently.”
Mark Steinhardt is an Executive Director at InterFinancial – a specialist mid-market M&A advisory firm headquartered in Brisbane. Founded in 1986, InterFinancial have worked on more than 300 successful transactions and, as part of the Clairfield International Group, are able to open doors around the world.
