The idea of selling a company—the embodiment of the owner’s will and character—is a daunting challenge. Every business owner I know cares deeply for his company. He has sacrificed mightily for the business over the years. In the early days he probably went without pay, sometimes putting his own children in hardship because employees’ payroll came first. If the company borrowed money there is a good chance the owner has pledged all his personal assets to support the loan. The products, the systems, the team – the owner has poured himself into every bit of it. It bears his stamp, his mark, his character. To turn a life’s work over to a new owner is a deeply personal and challenging decision.
Perhaps it is not a sale but there is a need to raise capital from outside investors. Same effect. After all, an investor is a buyer who simply buys less than 100% of the stock. This might be even more challenging for an owner as there are new people to be accountable to, a different breed now requiring different sorts of results and accountability.
I have helped owners sell their companies and raise capital for several decades now. Literally every time the personal, emotional and character issues far outweigh the financial aspects. It is frightening to put your life’s work in someone else’s hands.
So the message I want to share with owners is this: there are good buyers out there. Really good. They are not easy to find and it takes time, but it absolutely can be done. Plus, your company and your vision could actually thrive with a carefully chosen new owner.
The best buyers are builders. They are looking for growth. They want to invest in the excellent company you have built and take it even further. They want your vision. They want to see it through and enable it. They will promote and reward the best people on your team, perhaps even opening opportunities and growth for them that are beyond the company’s reach right now.
It is important to understand that from the buyer’s perspective there is a real shortage of compelling opportunities. As a result, they have to work hard to find a good growth company and a well-prepared seller. Serious buyers are continuously and actively searching for the best stories.
Also, there are lots of buyers. So many that they must compete with each other when a good opportunity arises. When properly managed this can work to the owner’s benefit and create a favorable situation for the company.
There are clear lessons for a business owner who is positioning to access the market. To end up with the best buyer, first be a growth story. You may be pulling back from new investments as you advance in years (and appropriately so), or your present resources may be fully tapped already. But all owners know there is always more out there. There are product opportunities you’ve declined, markets you could reach, and expansion you could undertake. So make growth opportunities the primary focus of your story. The best buyers want to marry their capital with your company to capture the growth that might be beyond you now.
The second lesson is even simpler. Let your story be known. Find ways to get in the flow of investors and buyers. Talk with them about partnering to pursue the growth you know is there. Being a private company does not mean you cannot tell your story. You have something they are passionately searching for and they have the resources you need. You will never find each other if you keep your story to yourself.
The best buyers are builders. Find one who can build on what you have already accomplished and take it even closer to its ultimate potential. Those are the best deals, and everyone wins.