Intelligent Advice

It Came During The Night

By John Weber

It Came During The Night

I awoke to loud thumping noises and a low, guttural howling.  It was 2:30 AM and it was not until I felt the chill in the air of my room that I realized that the Polar Vortex had arrived.  As quickly as the city street plow had sealed my freshly cleared driveway with a four-foot wave of snow and ice, the coldest weather that my house had ever adjusted to was here.  While everyone tried to prepare for this arctic blast, one never knows what to expect or how they will react until it finally arrives.

We often see a similar effect in the business owners that we work with when selling their businesses.  Although the time leading up to the sale is filled with planning and detailed work involving analysis, conversation and preparation, when an owner is face to face with the finality of a purchase agreement, and a closing date weeks or days away, the realization that “this is it” can come like a cold wind in the middle of the night.  

Is there anything that has not been discussed?  Selling a business that you put your heart and soul into and that survived and flourished despite the initial doubts of friends, family, and competition is a big decision and can have a deeply emotional impact.  Family discord, negative reactions, skepticism from long time advisors about whether selling is the right thing to do, or whether you are receiving the best price, are but a few of the things that can awaken even the soundest sleepers in the middle of the night.

It is important in these situations to communicate with and understand the impact that the sale will have on you, your family, other stakeholders, and your employees.  Sound financial planning and modeling can alleviate the fear of whether you will be able to live as you are accustomed to following the sale.  Understanding and getting comfortable with what the market is willing to pay for a business can help deflect the comments from armchair quarterbacks who tell you that you can get more no matter what the offer is.  Understanding that both the buyer and the seller accept risks in a transaction of this type and approaching the deal with risk management in mind rather than willingness to accept no risk at all can make the transaction better for all involved.

Most business owners only sell a business once in their lifetime.  We do it for a living, and are here to help, and to listen.

Published by Water Street Advisors in
February 2019

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