Why Not Just DIY Your Business Sale and Save Money?

Why not do your business sale yourself and save money?

We get this question quite a bit, especially now because we're in a buyout boom and private equity firms have junior associates cold calling and emailing business owners with unstructured offers for their companies.?

And we will usually get the question from those contacted as a challenge. Something like, “why should I hire you when I could just do this myself?” Often the entrepreneur goes on to explain that the prospective buyer hit their “number”, that they “like the way the letter of intent looks”, and further they’ve been working with the same generalist attorney for years, and they can hammer out the details themselves to save hassle and money.?

We typically wish them luck and make the offer that we’re available should they get stuck or change their mind. And that might be the right way to go. I say “might”, though more accurately, it rarely works well. First, it’s unlikely like the highest price and the best terms are going to come from an unsolicited buyer with no competitive reason to pay full price or offer more attractive terms. Private equity firms have an incentive to pay less now so that they’ll make a higher return for their investors when they sell down the road. And strategic buyers, often public companies have a duty to their shareholders to be careful with expenses and maximize profit. Neither one of those groups are incentivized to pay you more for your company or make the process simple at the expense of their investors and stakeholders.?

That first letter of intent may have terms and conditions that are unfamiliar to you and any attorney without significant merger & acquisition (M&A) expertise, so signing it and moving forward is unlikely to be the best decision for you, your employees, and your family. Bring in the right professionals and they’ll pay for themselves, often many times over, by reducing your risks or maximizes your sale price, terms, and legacy.?

You're not going to chase away a serious buyer by bringing in other professionals and looking at what your company competitively might be worth. The buyer you will chase away will be one who's trying to steal your company away from you at a low price. Sunlight here is the best disinfectant. Go ahead and shine a light on the process. If it's a good offer to begin with, it'll hold up. And if not, you don't want to sell to that buyer anyway.