I recently met one of my girlfriends for a cup of coffee. As we explored the meaning of life and solved the world’s problems, we also discussed her desire to settle down and get married. For a while, I was puzzled why she had such a difficult time finding her Mr. Right. She is a very attractive 40-something woman, possessed of a polished elegance, has a strong career, speaks two foreign languages, has a well-developed sense of humor, and is genuinely nice and kind. Every woman wants her prince on a white horse, but I expected my friend would have several princes courting her. So I asked her: “What are your minimum qualifications for a future husband?” And all of a sudden it became clear. For my friend, Mr. Right has to be at least 6’4” tall, with blond hair, blue eyes, chiseled good looks, and a six-pack stomach. He has to play soccer and tennis. And violin. He needs to have a fabulous career and earn great money, but never work past 5:00 and always be home for dinner. And he should enjoy going with her to pottery classes. Now, I love my own husband immensely, and I think he’s pretty amazing, but against that set of criteria, he would fail epically. So I fully expect to be having the same conversation with my girlfriend ten years from now, instead of a more fulfilling conversation about how she is enjoying her marriage, children, and family life.
Keep an open mind
You may be wondering why I’ve shared this anecdote in a blog about business sales, and I’ll tell you. One of the most important questions I ask all potential clients who want to sell their business is who they believe would make a good buyer. The responses frequently echo my girlfriend’s Mr. Right. The ideal buyer should be an energetic 30-year-old with at least 20 years of industry experience and a million dollars of free cash. The buyer should be a strategic purchaser, already owning a successful business in the same field, with expert-level knowledge of the space, but a willingness to do whatever the seller thinks best. I’ve exaggerated for effect, but only slightly, and I’m still waiting for a buyer who plays soccer, tennis, and violin. Just like it is important for my girlfriend to remember that the number of single women vastly exceeds the number of ideal single men, it is also important for business owners to remember that, especially in Connecticut, the number of sellers exceeds the number of qualified buyers. And at least for now, there is no swipe-left, swipe-right app for potential sellers to find real-time buyers.
Some pie is always better than no pie…
There is real, bottom-line danger here. Underappreciating and undervaluing your business can cause you to leave some money on the table when you sell. Overappreciating and overvaluing your business can cause you to leave all of your money on the table when you are unable to sell at all. Matching a compelling business with a qualified, high-likelihood buyer is more art than science, and more eHarmony than Tinder.
Don’t get me wrong, business owners who have poured heart, soul, blood, sweat, tears, and other things into building their successful brands want to ensure that their legacy survives in some way. But this consideration should rightly be secondary to more pressing issues of fit. How likely is the prospective buyer to follow through on a transaction? Can the buyer properly operate (and perhaps even grow) the business? Does the buyer have sufficient capital, credit, and expertise to timely close a transaction? Is the buyer capable of understanding the intricacies of the business and industry? Finding someone who satisfies these pragmatic requirements is often difficult enough without insisting that she also share the seller’s vision and approach. Jeff Bezos had never run a trillion dollar public company when he began selling books online out of his garage, but he’s done a pretty good job with Amazon, right?
Never underestimate smart people
All of which is to say that unless a business requires extremely specialized knowledge (think brain surgery, rocket science, or the distilling of fine spirits), most potential buyers that are otherwise good prospects will likely possess transferable skills that will lend themselves to a seller’s business. There are many examples of people becoming very successful without any prior skill or experience at all, and not just in Hollywood. A smart, driven person is generally able to learn all of the salient aspects of a business in a short period of time, and he likely also will bring new ideas and a fresh perspective, which together can help him to take the company to a new level. Moreover, a typical individual buyer will want to learn everything a seller does and how the seller does it before she starts implementing any new strategic or operational vision, and so the seller has significant opportunity to influence perspective. It may be very different when a business is sold to a strategic buyer, and a seller should understand that strategic buyers generally have their own vision, methods, and know-how that they will look to leverage. Any number of things may change after a sale, but the most important thing for any seller is achieving a sale in the first place. Keeping an open mind, listening to each prospective purchaser, and being realistic will always contribute to a successful sale of a business. And who knows, perhaps your buyer will be a 6’4”, blond haired, blue-eyed, Renaissance man who’s seen Ghost one too many times.
About Comer Business Brokers
Comer Business Brokers, LLC, is a full-service business brokerage firm with locations in Fairfield County, CT and the Raleigh, NC metro area. CBB services the entire state of Connecticut, Westchester County, NY, and the Research Triangle area and the Eastern part of North Carolina. Owner and founder Irina Comer has more than a decade of experience of mergers and acquisitions of all types and sizes. Prior to starting her career in business brokerage industry, she spent 10 years at PricewaterhouseCoopers advising local, national, and international companies on transactional issues, including valuation, diligence, structuring and positioning. After obtaining her MBA from New York University’s Stern School of Business, Irina worked with mergers and acquisitions division of Bank of America Merrill Lynch. For a full list of services and listings please refer to www.comerbb.com. Comer Business Brokers can help you to structure a deal that makes sense and close efficiently and with confidence, all while maintaining the strictest confidentiality of your personal and commercial information. We hope that this adds to your understanding of the process, and we look forward to hearing from you when you decide to take the plunge. Best of luck!
For a complete list of our listings refer to www.comerbb.com