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Selling Your Business Successfully – (Parts 5&6)

Sizing up your situation

One of the most important things you can do as a CEO is to ensure that your exit plan is current. Your plan should examine where you are now and where you need to go to realize your financial goals. It should also identify the gaps you need to overcome.

It can also help to envision yourself and what you would like to be doing in five years. This allows you to make larger, more ambitious goals toward the end of the five years, with smaller goals that are easier to accomplish sprinkled throughout your five-year timeline. This type of visual — a drawn-out timeline of your own design — can facilitate realizing both your potential and the aforementioned gaps you’ll need to overcome as a CEO.

It’s important to recognize that it is very difficult to be good at all things. Because most of us are not wired, from an emotional standpoint, to effectively develop and maintain our existing strategies, you may want to consider working with a qualified financial adviser. One major survey of affluent CEOs found that 90.2 percent of them want to work with financial advisers.

Although finding a financial advisor in Walnut Creek who is a good fit for you can be challenging, do not let this discourage you. There are plenty of qualified financial advisors who are ready to help ensure you reach your financial planning goals by maintaining a strategy that works for both you and your business.


Preliminary discussions give the buyer the opportunity to communicate his strategy and how he sees your company fitting into that strategy. You, as the seller, should have a clear understanding of why the buyer is interested in order to be as positively engaged in this process as possible.

The initial discussions should also deal with the issues of philosophy, culture, expectations of customers, and other “intangible” issues.

While these can be difficult issues to put your hands around, you will want to start building your understanding of the other party immediately as the intangible issues may be more vital to the success of the deal than the financial numbers. Beginning to understand everything about the other party — including their background, aspirations, and goals — will prove incredibly useful once the discussions progress past the preliminary stage.

The preliminary discussions will give you insight and firsthand observations about how the buyer philosophically runs a business and the buyer’s operations style. Be prepared with questions about the buyer’s business, acquisition strategy and planned implementation approach. This will, in turn, show the buyer or buyers that you are not only serious about these discussions but that you are just as determined if not more so to keep your business successful.

This is where you will discover how prepared and logical your potential buyer actually is. What the buyer says should be in line with the buyer’s proposed strategy. If the potential buyer is a pair or group of partners, watch how they interact with each other. You should gather enough information from this meeting to know if you want to continue discussions.

If your discussions and visions for the business are not aligning at this point, make sure your plan your next step accordingly. It is important to realize when a buyer is not going to be a good fit for you and your business.

The buyer’s urge to get right down to the “brass tacks” of price and terms can be overwhelming. Resist this temptation.

Discussion of the pricing and terms of the deal raises the tension of the discussions and often narrows the flow of information. Don’t discuss price and financial details until you are comfortable with the compatibility of businesses. In discussions with a potential acquirer, keep your strategy in focus at all times.

Ask prospective buyers to sign a confidentiality agreement before you show them any detailed information. Confidentiality agreements may be difficult to enforce but they act as a serious psychological commitment for most buyers. Those buyers who are not willing to sign, or wish to make numerous changes to, the confidentiality agreement should be regarded with caution.

Please note it is important to obtain independent and qualified legal counsel to draft agreements specific to your situation. In addition to the economic considerations, buyers and sellers must evaluate how their values, philosophy and business culture will fit with those of the other party.

Remember that you are emotionally attached to your business – allowing your professional advisers to handle the preliminary discussions may be a wise idea.


Once you and the buyer agree there is a good match, the buyer will begin the due diligence process. For you, this is invasive. At this point, you may need to disclose to your key employees that you are negotiating to sell or merge your business.

Now more than ever, organization is key. It is critical to remember to remain organized (if you are already confident in your business’ organizational structure) or to begin to organize in a way that makes sense for your business.

You should put together a detailed list of financials and documents well before you enter into this stage of negotiations so as not to delay the discussions. In addition, by doing your own internal due diligence early, you will have had the opportunity to clean up any problems and outstanding issues.

Christopher G. Snyder and Haitham “Hutch” E. Ashoo are principals of Pillar Financial Services in Walnut Creek. Contact them at 925-356-678

US Bank Wealth Management