Video 11 – What Slows Down A Business Sale Process The Most?

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Mike Whittle:

Typically, the seller.

Rob Goddard:

It’s the seller that slows down the sales process, I like that. I’ll use that one in my next book.

Mike Whittle:

It seems incongruous, doesn’t it?

Steve Barry:

It’s pretty much always the seller.

Mike Whittle:

It seems incongruous, but having elected to go to market, we have a very specific job to do as the agent. We have to gather up quite a lot of information and present that in a very specific way, and that puts a lot of the burden on the client themselves. They’ve got a lot of work to do and nobody should go into this with any illusions. It’s 12 months of very hard work to sell a business, and there’s a lot of emphasis on the seller to make sure that they produce the information, they produce in a timely fashion and that they’re ready to go on the journey and be involved in the meetings they have to be in.

Mike Whittle:

In my experience, it’s always the seller that slows down the process.

Mike Whittle:

Ironically.

Rob Goddard:

Ironically.

Mike Whittle:

What do they do then? Can you think of an example?

Rob Goddard:

Going away on holiday, Rob.

Mike Whittle:

To Panama, yeah?

Rob Goddard:

Perhaps there’s some information that a potential buyer needs, questions that need to be answered that perhaps they leave for a few days because they’re busy running their business, which is understandable, but there’s a heavy commitment in this process that if you lead through it in a timely fashion, they need to be prepared to deal with.

Mike Whittle:

How important is it, Steve, with the other partners in a transaction, like lawyers and accountants, play their part as well.

Steve Barry:

Really important. From a practical perspective, as we say quite regularly, a client can use their own lawyers, they can use their own accountants to support them in the process. No problem at all. We would always want to say that if they’re using a firm of lawyers or a firm of accountants, they need to be in firms that are experienced in commercial transactions and not family law specialists or the next door accountant. Nothing wrong with that necessarily, but they need have experience of what we do and they need to be attuned to what their client is trying to achieve.

Steve Barry:

We do like to introduce to partner firms that we work with, because it’s a reciprocal arrangement where they introduce to us and we will give an opportunity for them to quote to one of our clients, and we know we can rely on them to deliver in a timely fashion alongside what we’re trying to do.

Steve Barry:

I’d add that’s particularly pertinent on early stage requests that are made whilst we’re first at market, where our potential investors looking at the business got some interest and potential excitement in what they can see for the future, and further information requests come through. And if you can’t respond, if the client isn’t responding to that further information request promptly, the investors or acquirers start to sense something might be wrong. So again, we brief our clients regularly as you know, to be ready to respond. And my typical yardstick is we ought to be able to respond to an FI request within 24, 48 hours at the outside, or explain to the potential investor or acquirer why we can’t, and give them a time commitment.

Mike Whittle:

So FI being further information.

Steve Barry:

Sorry, yeah.

Mike Whittle:

So it’s all about momentum.

Rob Goddard:

And one other thing. If there’s more than one shareholder, make sure all of the shareholders agree before you go to market.

Mike Whittle:

Really?

Steve Barry:

Otherwise you have something that’s affectionately called herding cats. That’s correct, yeah.

Mike Whittle:

Or eels.

Steve Barry:

Yes. Yeah.

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