I remember one new project we got and I had literally nothing to do with it and didn’t know the client. Similarly, we had somebody walking around the hallways and I asked, “Who is that?” “They work for you.” Those were some key indicators that perhaps I wasn’t needed in the day-to-day aspects of running the business.
One of the ways was talking with colleagues. One of the things I found, though, is that there weren’t a lot of experiences out there. The few people who had exited a business only had experience with one provider. They just said, I don’t know, this company sold my business. And it was six years ago and they did fine. It was an unusual sort of recommendation. Then I reached out to see who else had done transactions that I knew from social media and LinkedIn.
The biggest thing that I found between firms was the difference between the first meeting and the second meeting. Most firms that I spoke with did a fine job at the first meeting. I think that’s mostly because they know so much more than I do about how to sell a business that they are all very impressive and solid.
The second meeting told the difference. SEA came to the second meeting 10 times smarter than they were at the first meeting and had really done the research on the companies that could be prospective buyers. The other firms I was considering hadn’t done much homework. I thought that was the best indicator of the amount of work that they would be doing throughout the M&A process. So, it was an easy decision to pick SEA at that point.
One technique I started employing, and it took me about three months to figure this out, is that I only handled issues related to the deal before 10am or after 4pm. It just wore me down to get a call at 11, 1, and 3 asking for different documents from different people at different potential buyers.
Working closely with SEA, I thought that that really worked well. They worked during the heart of the day. Kind of grouped all the issues, and then we went through them in a scheduled, daily call. I don’t do very well with ad hoc emergencies. I like to plan my work. So, we just had a daily call, almost every day around 4 or 5 o’clock. That helped me tremendously.
One of the things that surprised me was how late in the game the offer kind of drifted downwards and that the other side poked holes in a wide variety of things that were very reasonable. I had to fight off so much. SEA helped a lot in defending and explaining all of the issues related to primarily the income statement and our revenue streams and the stability and predictability of those revenue streams.
What about working capital?
For the entrepreneur, the advice I would give is you’ve got to take the deal completely over the goal line. Do not let up for a second until the very end of the deal. Until the money is in your account.
I was very surprised that a day before the deal closed, there was a significant attempt to drop the finances of the deal. I learned that if I take my eye off the ball, and if I envision that Ferrari and make a down payment on a jet, I lose my ability to walk away from the deal. Even at the very last day, I was willing to walk away. And I out-pokered the other team. They were very excited about the deal. In the end, I was willing to walk away and they weren’t. So, the deal went through. I thought that was the key.
They didn’t want to know about Sally being sick, or about Joe being on vacation. He’s going to sign it next week, the big deal. Everything that worked to their advantage to lower the price, they tried. I just learned to keep the sales pressure as high as it can be and keep going right up until the very last day.
For me, that didn’t happen. SEA helped me because I could keep the revenues going while they answered all the detailed questions from the buyer. In my opinion, stupid questions, but certainly detailed questions. And prioritized when my time was needed. You know, SEA continued to give me good advice, which is: keep bringing in the revenue and let us go handle the due diligence details.