11^th May 2022

Most business owners will only sell one company in a lifetime. While much has been written about what investors look for in a target company and how to structure the best deal, less emphasis is placed on the emotions involved.

The reality is, selling a business is an emotionally charged process. If you are considering selling the company you have worked hard to build, you are likely to go through a common progression of six emotions along the way.

1. Confusion. At first, you may be perplexed about whether selling the business is the right decision, what the business will be worth, and whether you will have enough money once the deal is completed.

2. Fear. Soon, you may become fearful that the business won’t sell or that people will find out you are considering selling the company before you are ready to share it with them.

3. Guilt. As the reality of your decision sets in, it is common to feel guilty about how it will affect your employees and family. You might wonder what employees will think of you once they find out or worry that the new owner will lay off staff. You might even feel that you are letting your family down by exiting the business.

4. Anxiety. As you begin the sale process, anxiety tends to take over. You will realize that taking your company to market is a time-consuming, complex process that requires a great deal of your time and energy—even as you are busy running the business. It is only natural to be anxious about what this process will involve.

5. Euphoria. Once a buyer agrees to purchase the company and you have a Letter of Intent in hand, euphoria usually kicks in. However, there is still much work to be done. For example, the buyer will conduct extensive due diligence, which is arduous and stressful for you as the seller. You will start to wonder: How much more information can the buyer request of me? How can I find time to run the business when I am busy selling the business? You will also be knee-deep in document negotiation, communication, and plan-ning how to integrate the companies. At this point, euphoria quickly gives way to fatigue.

6. Relief. When the due diligence and negotiation is done, the documents are signed, and the funds have been wired, you are likely to feel relieved. The day-to-day responsibilities of running a business are behind you and your bank account is flush with cash. This feeling won’t last long, though, as it is commonly replaced by the question, “What is next?”

Taming the Emotions of a Deal
While you can never avoid this range of emotions entirely, an experienced investment banker can smooth the process and minimize the unknowns by helping to address these five key questions:

– What is the value of your business? A professional can determine the value of the business, identify what specifically drives value in your business, and recommend ways to build greater value before you take the company to market.

– What is the marketability of your business? An objective view of your business’s condition and marketability can reduce your fear and anxiety about the odds of a successful sale. Your investment banking partner will determine whether your financial reporting can withstand a quality of earnings review and assess whether you have the necessary non-solicitation and non-compete agreements to tie key staff to the sale outcome.

– Do you have the right professional advisors? Beyond your investment banker, you will need to rely on other experts for guidance, such as a corporate attorney and CPA (both of whom should have years of experience selling businesses).

– Do you have the right personal financial plan? Your personal financial situation will change significantly once you sell the business. It is important to plan for this eventuality and make sure you are confident that you are prepared to enjoy a secure financial future.

– What will you do next? For most of us, career plays a central role in our identity. Before you begin the process of selling the company you have devoted much of your life to, it is best to think about what the next chapter will look like—whether it will involve embarking on a new career, doing volunteer work, joining a board, or spending more time with family.

Recognizing the emotional element of a business sale is just as important as striking the best possible deal. By choosing the right investment banking and corporate advisory team, you will gain a partner that has been through the process countless times, knows what to expect, and can steer you through it smoothly, helping you to keep your emotions under control as you work to achieve the optimal outcome. I95 Content Marketing

Charlie  Maskell  is managing partner and founder of Chesapeake Corporate Advisors, a boutique investment banking and corporate advisory firm that serves investor-owned and closely held emerging growth and middle market companies.