5 Ways To Kill Your Business Sale Transaction Faster Than A Turkey on Christmas Eve (and how to avoid them)

You have an acceptable offer on the table. The acquirer is credible, well financed and has appointed top Lawyers and Corporate Finance Advisors to run due diligence and contracting. You have good reason to proceed.

You have one chance to get it right first time. So you may not want to do the following:

1. Wing It

You didn’t become the leader of a successful business without being a smart commercial operator.  So now is not the time to become reactive and let the acquirer arbitrarily set the process. If you do you will likely find you are knee deep in costs, mired in documents & spreadsheets, and taken weeks or even months away from running the business and still wondering what the pathway to completion looks like.

Alternatively, make sure you understand all the necessary actions to successfully complete and deliver on them.

2. Select your advisors & lawyers as an afterthought

Selling a company is a highly specialised area. If you ask the accountant who does your VAT returns and the local solicitor who transacted your home sale to negotiate your Equity Bridge, Sale & Purchase Agreement and Disclosure Exercise, instead of an experienced Corporate Financier working with an M&A Lawyer, you will find the whole process becomes protracted, costly, high risk and probably fruitless.

3. Provide financial reports in whatever format you feel like

Your acquirer will be conducting a thorough due diligence exercise, usually having appointed a top accounting or advisory firm. They will be looking to ensure there is reconcilable coherence between your Information Memorandum, forecasts, statutory accounts and ongoing management accounts.

If they identify gaps this will shake their confidence in the commercial credibility and governance of the business, your deal will have as much chance of taking flight as a Dodo.

4. Surprise the acquirer with difficult facts

Challenges and disappointments are a fact of business life.  Indeed, some people say that if you haven’t got any problems you’re not trying hard enough. So don’t try and hide, say, a contentious HR issue or ongoing dispute with a key supplier.

If the acquirer learns about this from you volunteering the details during the due diligence process, you will find a worthy buyer to be understanding & pragmatic. But if you try and hide the facts, or wait til the last minute before making a key disclosure, you may find that trust is eroded. Trust is easy to lose, hard to regain.

5. Take your time

Offer on the table?  Price & terms work for you?  Then crack on!

If you spend the next weeks & months deliberating and procrastinating you could find there is a change in acquirer strategy or decision makers. Or the trading environment changes dramatically. Or you lose a key contract at the worst possible moment. Any one of which can be fatal to a transaction.

Instead, work with your M&A advisor and lawyer to progress the Heads of Terms swiftly, agree key milestones with the buyer and respond to due diligence requests as quickly as you can. Time is the enemy, proactivity is your friend!

So plan ahead, get a good team of experts around you and expedite your transaction as swiftly and professionally as possible to bring about life enhancing change.

Otherwise you could end up with just another statistic in the business sale graveyard.