Ten Lessons on Selling a Company.

Selling a company is a heady experience. The wise CEO knows, though, that many things can go wrong and that it pays to study what makes some transactions go well and others fall apart. Here are ten tips consolidated from personal experience on both sides of many deals that, while they may not guarantee success, if followed increase the odds of a good result:

  • Know what you seek in terms of price and role.  Do not be wishy-washy and do not get greedy; once you have what you want, take it!
  • Manage the sale like a project. Plan, staff, organize, guide, and govern it well. It takes a team of internal (CEO, CFO, CTO, etc.) and external (corporate lawyer(s), employment lawyer(s), banker(s), analyst(s), investor(s), etc.) players. Assign a leader of the inside team and a leader of the outside team to coordinate with each other. Consciously, purposefully, and thoughtfully deploy yourself and others from both inside and outside the organization to cover all the bases.

  • Perform through process.  Once you commit to results you must meet or exceed expectations or expect value to degrade by a high multiple of the miss. Only present financial plans and projections you know you can meet or exceed. Assign leaders who are not distracted by the chaos of the sale process to ensure operations go smoothly.
  • Know your facts and stick to them.  Do not make up answers on the fly. Script and memorize answers to frequently asked questions in order to address them comfortably and smoothly in casual conversation when they come up. Be sure everyone on the team gives the same answers to the same questions.
  • Prepare, Practice, and Perform. There is theater, staging, scripting, and artful management of people, behavior, and dialogue in a well-done management presentation.  What you say in front of high-potential buyers should be practiced several times in front of live audiences that give constructive feedback.
  • Dance. Nothing goes exactly as planned. Be prepared to go off-script.  Know your facts and share what you know. When matters for which you are unprepared come up, retreat until you have had time to collect your thoughts and prepare a well-formulated response. Do not wing-it.
  • Everyone is always selling. Those at the table have to brief their constituents and stakeholders. Buyers ask questions they will have to answer in order to convince those at the office to go through with the deal. View every question positively and go the extra step to make it easy for others to share your answers with those not present.
  • There is data in everything. Pay attention to what you do because every word, tone, and mode of operation feeds a fast-forming perception of who you are and what you are selling. The same applies in reverse. Take in everything your prospective buyers do and say as part of deciding whether and how you want to work with them for maximum results. The best time to read a person is when you first meet because they will not yet have any data to decide what to hide or otherwise manage.
  • Investors have only three emotions: apathy, fear, and greed. Manage accordingly.
  • Identify, develop fully, and then solve a prospective buyer’s biggest problem to get them hungry for you at a top price. For example, you might be able to sell a high-performing company at a premium price to a buyer that wants to raise new funds but cannot until uninvested capital from the previous raise is fully deployed.

One thought on “Ten Lessons on Selling a Company.”

  1. Excellent overview/strategy. One more thing that I’ve heard you say and it key – under the par Perform Through the Process…..continuing to perform in the business while selling the company or taking in a major investor is critical. When key people are involved in the sale/investment, it is easy to “take your eye off the ball” in the business…..and these processes can directly impact at least 2-3 quarters worth of performance and results.

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