A few weeks ago, one of the writers for Axial, a leading online M&A resource, interviewed a number of CEO coaches from Vistage organizations throughout the U.S. on the topics of mistakes to avoid during an M&A process. If you are not familiar with Vistage, it describes itself as:
“The world’s leading business advisory and executive coaching organization. Designed exclusively for CEOs, business owners and key executives.”
Their input in the article was quite insightful and together they came up with 20 mistakes to avoid if you are selling your company. You can download the entire discussion here: 20 M&A Mistakes to Avoid.
Although all of the 20 listed are important, the one that really caught my eye was mistake No. 14: Not creating a deal team.
Sadly, this is an exit planning mistake we hear about far too often. Many business owners have attempted to find a buyer for their companies alone, only to fail because they lack the in-depth knowledge and understanding of the process. And because of this, they’re forced to take their eye off running the business to close a transaction. This is how Arturo Lopez, Vistage Chair from Houston described it:
The last part of that statement is the most important: It takes 9-18 months to close most transactions (even if you have a team). It will most likely require up to 1,000 hours of your time to do it successfully on your own. If you are already working 50-60 hours every week just running your company, where will you find the extra 1,000 hours?
You will probably need to cut a few hours off of your regular workweek, maybe allotting 30 hours to the business and 30 to your exit strategy.
What happens next?
With your attention divided, you fail to reach your base year targets, which impacts your business valuation and ultimately could cost you thousands, if not millions, of dollars at close (or scuttle the deal outright). So, it is far better to hire a team of M&A professionals to help do the heavy lifting on your deal so you can focus on the very important job of running your company.
Here are what a few folks have told us over the years of the importance of hiring an M&A team:
The common theme you will hear from these folks is that planning an exit strategy alone while attempting to run your company is very, very difficult to do effectively. Either your buyer search will suffer or worse your business, and most cases, both will be hurt.
So take Mr. Lopez’ advice and hire an exit planning team to allow you to focus on running your business.
Of course, this is just one mistake that entrepreneurs often make. If you would like to learn the others, I invite you to attend a Generational Equity exit planning conference. These are designed to help busy business owners learn the basics of how and when to exit their companies for maximum value. Attending one could be the best use of your time in years. Contact us to learn more or use the following links to find an M&A conference near you:
By Carl Doerksen, Director of Corporate Development at Generational Equity.
© 2021 Generational Equity, LLC. All Rights Reserved.
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