Mike Whittle (UK Managing Director) and Steve Barry (Client Director) of EvolutionCBS highlight the value of trust between the seller and the business sales team and how it can play a key role in your business’ smooth sale.

So far in this series, we’ve discussed several key facets of the business sales process and highlighted how important it is that you have a sales team that you know you can trust. Loosely, we divide the entire sales process into three stages:

• Preparation
• Negotiation
• Due Diligence

The last one is the biggest hurdle of the lot. In fact, many business sales teams dodge it altogether. They’ll get you through Preparation and most of the way through Negotiation, only to fling the reins back to you and lawyers at the onset of Due Diligence. 

But it’s where so many deals end up going horribly wrong. We know that and commit not only to sticking with you and holding your hand at every stage of the process, but also to working tirelessly with you before you ever get to market. We make sure your business is ‘Due Diligence Ready’ and will stand up to the scrutiny it’ll face. While very few companies would say ‘no’ to their taking you on if you can’t pass that test, we’re one of those that would.

Why would we do that? We believe that taking on a client whose business will obviously not clear the Due Diligence stage is as much of a commercial decision as it is a moral one. There’s no point in taking you to market if your expectations of your business’s price are going to be undermined by what the buyer finds in Due Diligence. 

WHY IS DUE DILIGENCE SUCH A HEADACHE?

The landmines that are peppered all over this stage are unique to you and your prospective buyer. Without a doubt, the deal will fail if Due Diligence is not satisfied.

It’s your salesteam’s responsibility to manage and guide the deal through the ups and downs of the different nuances that come up during this stage. Your team needs the patience of a saint - keeping both sides calm, objective and empathic to get the deal to completion.

Remember – the whole sales process takes about one thousand five hundred manhours. Or to put it in the words of one of our clients, Tracey Williams: “If you think you can sell your own business, think again!” and we would urge you to do so, too. 

Each question feels like the last straw … although any one of them could be the one that makes or breaks the deal. The prospective buyer is not trying to be awkward; he or she is trying to see if the deal is worthwhile. It’s the buyer’s right to ask the question, it’s your responsibility to answer it.
 

A REALISTIC VIEW OF DUE DILIGENCE

The average number of questions that have come up during Due Diligence over the last sixteen businesses that we’ve sold is over seven hundred. 

The most we’ve had during Due Diligence that we’ve successfully completed was one thousand, two hundred and eighty-six. What’s more, each one had to be recorded, documented, tracked and tested to ensure it had been properly answered. 

Do you have the time, patience and experience to tackle that on your own? You could be within forty-eight hours of signing the deal – exhausted, frustrated and at the end of your tether. Then, you’re faced with a further twenty questions … 

A helpful way to look at it is to work out a monetary value for each question. Simply divide the transaction value by the number of questions. 

For example, if our average transaction price is £14 million and the average number of questions per transaction is seven hundred then each question is going to be worth an average of £20k to you. Put in those terms, most people find it easier to dig a little deeper for some extra patience!

If your team is used to coping with the Due Diligence stage, your sanity and the deal can stay intact. Not only should you be able to trust your team to handle the emotions and drive of the negotiation as a whole, but it needs to be scrutinising to a fault – not missing a single detail.

Remember, trust in your salesteam is key to the sales process. 

Here’s to your successful sale.

by Mike Whittle