Becoming a Master M&A Dealmaker When Selling Your Business

As the seller of a thriving business, you’re accustomed to making the tough decisions, negotiating deals and, far too often, prioritizing the demands of the business ahead of nearly everything else in your life. Your well-honed skillset has made your company a success, brought you to the mergers and acquisitions party, and will be beneficial as you work towards a successful sale of your company. By focusing on incorporating a few additional skills you have tucked away in your toolbox, you’ll progress on your journey toward becoming a master M&A dealmaker.

The reality is most M&A sellers have little to no experience with selling a company. An M&A sale will probably be the single largest transaction of your life, and you’ll be in new territory playing by rules you don’t fully understand at the beginning. In short, it can be an uncomfortable place for many business owners to be. Therefore, it’s critical to engage seasoned deal professionals to guide you through a transactional process they’ve been through many times. Your deal team will be able to educate and guide you through the M&A process, advise you on market values, and negotiate complex legal agreements that matter a lot to the outcome you end up with. Although they’ll be more knowledgeable about the process and less emotionally involved than you are, no one will know the intricacies of your business better than you. There will be many subtleties in the transaction that only you recognize. Simply put, it’s your deal and the more familiar you are with all its nuances, the more successful the deal process and outcome will be for you. Over the course of hundreds of transactions, we’ve found the best deals result when our clients embrace the following four principles.

1. Be Willing to Learn

When selling your business, there will be wave upon wave of new information that threatens to pull you under – new terminology, processes, documents. Expect and insist that your deal team professionals spend time educating and preparing you. It’s important they work closely with you in refining and prioritizing your objectives. This will enable them to effectively advocate for your interests and ensure that you get your must-haves. By walking you through the M&A process and key points in the contracts, it will help in level setting your expectations and deepen your understanding of the complex give-and-take that is part of successful M&A deals. Consider this insight from billionaire entrepreneur and Shark Tank investor Mark Cuban. “I learned that learning truly is a skill … and that by continuing to learn to this day, I can compete and get ahead of most people, because the reality is most people don’t put in the time to learn … and that’s always given me a competitive advantage.” (Inc., Growth Mindset is Crucial for Success).

 2. Be Prepared

A successful M&A deal is not a one-sided process, but rather a win for both sides. Successful sellers spend significant time crystallizing their own must-haves for the deal and take it a step further, digging deep to understand the needs and motivations of their counterparts. Putting themselves in the buyer’s shoes, they think through outcomes; then they take an objective approach to discussions and expect other side to also have an objective approach. Successful sellers study the contracts and work closely with their deal professionals to develop a hands-on understanding of the transaction. A highly successful client of ours said it best recently when we complimented them on their deal acumen and their persistent desire to understand key elements of the merger agreement: “I’ve learned through my career that you just have to do the work.” The bottom line is successful sellers pay attention to detail and are normally the hardest worker in the room.

3. Be Responsive

A typical M&A transaction takes nine months or more – a marathon undertaking that can be a drain on energy and resources. Still, successful sellers will maintain a sense of urgency throughout, always keeping their eyes on the prize. They remain accessible, persistent, and organized in responding to the never-ending inquiries of the buyer and their deal professionals. They place a high priority on getting the deal across the finish line – yes, all the while continuing to run their business.

 4. Be Willing to Walk Away
We previously dedicated an entire article to the importance of this principle.

In many deals, there comes a time when buyer and seller reach an impasse. One of the parties has a hard and fast requirement and the other simply can’t agree to it. Stalemate. Very often, this occurs after many hours, weeks and months have been invested in moving the transaction forward. Deal fatigue sets in and a seller may be tempted to surrender and accept the unacceptable just to close the deal. However, the most successful sellers never compromise their values. They work relentlessly with their deal professionals to get to a fair deal but when one isn’t on the table they’re prepared to say, “no deal”. They’re resilient and they know other buyers are out there.

Conclusion

Becoming a master M&A dealmaker is a journey. Successful sellers educate themselves on the M&A deal process. They work to understand their buyer’s motivations and must-haves, and build mutual respect by honoring those items. They study and understand the key points in their contracts. They focus on closing a transaction but are prepared to walk away if a deal is not meeting their needs. The most optimal transactions come about through collaboration when the seller – the acknowledged expert on the business – is an active, deeply committed participant, working with their deal professionals and the buyer towards a shared goal.

At Linden Law Partners, we specialize in quarterbacking all aspects of M&A deals, and we’ve represented buyers and sellers in hundreds of M&A deals. While there are many common threads among the most successful transactions, we recognize the uniqueness and personal attention required for each deal. Contact us to discuss how we can help.

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