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How to Overcome Your Four Biggest Fears After Getting an Offer on Your Business

Every business owner is battered by letters or phone calls asking about the sale of his or her business. You learn to ignore them or simply not put too much stock in them. But then, there’s a letter or phone call that’s different – you can tell there’s a real buyer on the other side.

Not many things are more overwhelming or intimidating than that conversation. Whether you’re ready to sell or not, there is a rush of emotions. Every fiber of your being wants this to work out for the survival of your business, for your employees, your family, your legacy. And, that immense desire can lead to deep fear.

Every day in our office we talk to business owners and we’ve gotten to know those fears well. Selling a business is scary – especially if it’s your first time doing it.  Thankfully, we’ve walked through this process many times in the past decade. After seeing it happen so many times, be assured – your fears are warranted but they shouldn’t paralyze you.

Below are the four fears we most often see plague business owners – plus a corresponding solution to ease those fears.

1. “I won’t get the money I want or deserve”

Through building your business, you’ve seen every nook and cranny of the operation, you’ve seen the ups and the downs of the financials, and you deeply know the hard work that went into creating the entity that supports your employee’s families. So, naturally, with all that insight, you have expectations for what your business is worth and the money you deserve to get from that value. You likely have a specific number in your head. That’s the number you hold dear and when a buyer comes along your #1 priority is protecting that number. You’re afraid that you won’t get the number that you spent your time and energy to attain.

Instead, understand the reality of dealmaking.

The fear that you won’t get the number you have in your head makes sense – you put a lot of skin in the game to build the business and that value should be realized when you sell. You deserve that. But, with the reality of dealmaking, there is a high likelihood you won’t get your number.

Here’s a key characteristic of deals: you can get your price OR your terms – not both.

Begin to hold your number loosely now so you can be emotionally prepared for an LOI to come across the table with a number that is lower than what you expected. We understand the fear of not getting that number but take comfort in this – in the sale of your business, the offer may not be where you want it but you might find out you care more about securing your employees’ futures or having a smooth exit out of the company or getting an earn-out provision.

In the sale of your business, as in any deal, you can get your price OR your terms. The more you learn about putting together the deal the more you will understand that your number may not matter as much as you think it does.

2. “My employees are going to freak out” 

There are horror stories of business ownership transfers gone wrong – the new boss waltzes in and fires everyone within the first week or jobs are outsourced or structure and processes are changed so everyone has to do something different than they were doing before the transition. Those horror stories are often the backdrop of the frenzy created in the break room when word slips that the owner is looking to sell. That frenzy has consequences that you can’t afford in your business operations.

Avoid that frenzy – let key employees inside the tent.

You likely won’t make an announcement to all your employees about the ownership transfer until the deal is finalized. But, for the deal to move past speculation, you’ll need help from inside your company. Even before an LOI is on the table, many buyers will ask for financial statements or tax returns. Depending on your level of involvement with the business, you may need help pulling these things together. And then, after an offer has been submitted and due diligence begins, you will certainly need help in collecting the vast amounts of information required for the process. (Check out our standard due diligence checklist here – that’s a lot to do by yourself!)

Bring an upper manager or two inside the tent who have the wherewithal to handle the detailed requests with the required confidentiality.  These managers will be incredibly valuable the day after the deal closes when you walk in with the new owner – they can assist in the transition in a more meaningful way since they have been along for the ride since the beginning. Having those key, trusted employees in the know can help ease fears that everyone is going to flee if rumors fly.

3. “I don’t know what I don’t know – I feel so unprepared”

We love educating business owners on dealmaking because we understand and empathize with this fear so deeply. Selling a business is uncharted territory for most business owners and the learning curve is incredibly steep. You want your business to be represented well to potential buyers but, without an understanding of the dealmaking process, it can be tough to feel confident. There is fear of messing up and ruining the business because of the lack of knowledge. This fear can lead some business owners to aggressively defensive behavior or to withdraw from the opportunity completely.

So, make some phone calls.

When a buyer comes knocking on your door and you sense that this is a knock you should at least learn more about, pick up your phone. You don’t have a whole lot of time to waste so you very quickly need to send up a flair to your friends who have done this before. Get them to refer you to people that you can trust and get those people to join your corner. Whether they were a buyer, seller or advisor, it is often incredibly insightful to talk to someone who has done a deal before. Don’t be afraid to ask for help. One of your phone calls should be to us – we do this all day every day. We welcome the opportunity to frame the situation for you and walk you through the twists and turns you weren’t expecting.

A 20-minute conversation with someone who has walked through a deal will make your knowledge level go from miles away from shore to a toe in the water. Another 20-minute conversation will get your feet wet and pretty soon, you’ll be knee deep. Don’t expect to be swimming any time soon though. Dealmaking is complicated and it’s taken us a decade to get our strokes down. But, when initially you couldn’t even see the water, having that toe in will feel really good. Pick up the phone to make that happen.

4. “I can’t talk to the buyer – they are going to steal all my proprietary information” 

Confidentiality is key and should certainly be a concern. Forking over information you’ve always held close feels unnatural and vulnerable. These types of conversations don’t happen often so it’s hard to know how approach them. The emotions are usually high when walking into a conversation with a potential buyer and there are questions of who holds the power. Obviously, you want to be in control. Fear surfaces when it appears that the buyer has leverage over you and can take advantage of the situation.

Sign an NDA and be assured that the buyer doesn’t actually know that much.

We have a unique vantage point on this topic because we work with sellers who receive offers on their businesses but we also represent buyers who make those offers to business owners. We send letters on behalf of our clients to business owners asking if they are interested in selling. Our goal with the letters is to simply start a conversation. To ensure confidentiality, ask for an Non-Disclosure Agreement (NDA). A real buyer will be willing to provide that protection.

When business owners call us in response to a letter we sent they are often unsure how we found out about them and much we know about their company. This is fear bubbling up from feeling out of control. Rest assured – we don’t know much and that’s true for all buyers. Some buyers may pretend to know a lot about your business but they’re usually just making educated (and sometimes not so educated) guesses. Because your business is privately-held, we only know what your website and certain databases tell us. And that information is usually skewed.

So, you do have leverage because you hold the key to information about your company. The sooner you’re willing to ease your fear about being taken advantage of the sooner you and the buyer can discern if there’s any “there there” in the match. A conversation is the perfect beginning of learning for both sides of the table. You’ll likely be surprised with the insights a conversation with a real buyer can provide.

Many times, the emotions that happen in a business transition are surprising to business owners. But they shouldn’t be. You’ve worked hard to build your company and the pride stemming from that creates an emotional bond to the business. The prospect of that bond changing – even if you’re ready to sell – is intimidating. Fear is a natural response.

But, fear doesn’t have to be your guide through the entire process.

When you’re feeling tied to a specific number remember that you’ll get your price or your terms.

When you’re unsure what will happen if employees find out bring a few trusted managers inside the tent.

When your inexperience feels insurmountable pick up the phone to learn from others’ experience.

When you’re not sure if you can trust the buyerget an NDA in place and see if there’s anything there.

You’ll be so glad fear didn’t hold you back.