If you've ever felt intimidated or confused about the process of selling your company, just think of the transaction the same way you would if you were selling your home. This is the fourth in a multi-part series. In case you missed them, read instalments one, two and three.
Step 4: The showing
Once an agent lists your house and puts a sign on the lawn, he or she starts scheduling showings. Potential buyers and their agents walk through your home and have a chance to see first-hand what you're selling. They imagine themselves in it, cooking dinner while the kids are playing downstairs. They may picture themselves entertaining friends, and inquire about the local schools.
When selling your business, potential acquirers will want to schedule a showing — a "management presentation" in M&A parlance. This is your chance to paint a picture of what you have built and the future you see for your business and industry. It's also an opportunity for the potential buyer to meet you and your management team.
Just as a stranger walking through your home will generally be gracious and avoid making negative comments about your choice of décor, the potential buyer of your business typically asks polite questions at the management presentation, steering clear of saying anything you might take personally (those comments and questions are usually saved for due diligence).
Just as is the case when showing your house, you may end up doing a number of management presentations before you get an offer. You'll get one trick question during the presentations: "Why do you want to sell your business?"
It may be tempting to explain how tired you are and how much you need a vacation, but don't. The prospective buyer wants to know you plan to stay on for a while to help them run your business. Stick with an answer like: "I've built something of real value and I'm keen to see us get to the next level. At the same time, I'm at a stage of my life where I'd like to create some liquidity for the value I've created so far and find a way to participate in our next stage of growth."
Nail the question and you'll probably get to Step 5: The offer, which will be the subject of the March 3 post.
Special to the Globe and Mail
John Warrillow is the author of Built To Sell: Turn Your Business Into One You Can Sell . Throughout his career as an entrepreneur, Mr. Warrillow has started and exited four companies. Most recently he transformed Warrillow & Co. from a boutique consultancy into a recurring revenue model subscription business, which he sold to The Corporate Executive Board in 2008. He is the author of Drilling for Gold and in 2008 was recognized by BtoB Magazine's "Who's Who" list as one of America's most influential business-to-business marketers.