The following is an excerpt from Privately Held Company Newsletter.
- A decision to sell is not set in concrete, but should be awfully close to it. If the business is a family business, all of the family members should be in agreement. The same is true for all of the stockholders.
- The decision on who is going to be the ultimate manager of the selling process shoul db emade prior to going to market. It may be the largest stockholder or the CEO, but a single person should be appointed.
- Timeframes should be established prior to selling and milestones set for creating/completing items such as the selling memorandum, list of buyer contacts, letter of intent, closing etc.Deals that drag don't close.
- Recognize "on and off" balance sheet items such as work-in-progress billing, customer or client prepayments, contractual obligations, legal threats, etc.
- Negotiate key employee agreements or stay agreements. Stay agreements should be at least two to six months.
- Create a special place for all of the relevant documents and information a buyer or due diligence team would need to see.
- Keep in mind that complexity is a deal killer. The more complicated the deal, the less likely it is to work.
- And, finally, don't negotiate directly. Use an intermediary who can mediate, act as a buffer, and carry on "sidebar" conversations. Don't let time elapse between meetings with an interested buyer. Once the process starts, do all you can to keep it moving, or the process may lose its momentum and affect the business-as well as the morale of the employees. These are additional reasons to have an intermediary involved from beginning to end.
