New Tips for a Modern Era
If you believe 2021 might be the year to sell your family business, be aware that things have changed in terms of how to sell a print business. Like everything else, methods that worked 30 years ago aren’t relevant in the 21st century. Here are some key points you should know about the new (and less costly!) approach to selling your family printing business.
What’s Changed
OLD WAY: You hire a business broker to help find buyers. Because the broker can ask for a big fee upfront and an even bigger fee when a sale closes, he may not always look out for a deal that meets your objectives — or those of your family, employees, or partners.
NEW WAY: The business owner retains a print industry specialist who coordinates the work of experienced professionals with many successes in selling businesses. The LaManna Consulting Group has a vast global network of industry-specific professionals in their field of expertise who can help you through all stages of the merger and acquisition (M&A) process. We customize your M&A strategies and processes by collaborating with trusted referrals, making introductions, and providing strategic consulting services.
OLD WAY: The seller called all the shots. The business owner expected the business broker to comply with all of their demands, regardless of whether they might personally cause the potential opportunity to implode.
NEW WAY: Buyers provide comprehensive due diligence checklists. Most strategic and financial investors expect the seller to detail specific facts about the business well before they will even consider preparing an acquisition offer. Sellers who understand what today’s buyers are looking for achieve the best deals and successfully close on transactions.
OLD WAY: The business owner’s team develops their own valuation. You might consult with a CPA, business broker, friend, and possibly a certified appraiser to determine the value of your business and its real estate values. Then, the business broker can offer to create a CIM (Confidential Information Memorandum) and market it to “pitch” potential offerings to prospective buyers.
NEW WAY: The advisor and team of experts conduct an independent, objective valuation and assess the history and potential growth of the business. From our knowledge and industry expertise, we know why some deals succeed and others fall apart. Some deals fail because the business owners are not realistic about the value of the company that they worked so long and hard to build. In some cases, business owners are pleased to learn that the true value of their business might be higher than expected.
OLD WAY: The general business broker without print-industry experience only reaches out to established contacts within the printing business. If the broker markets your business with an online marketing campaign or sends confidential information to contacts who aren’t qualified to acquire a business, it can take a while to connect with a serious buyer. Meanwhile, when word leaks out that your company is up for sale, it can spark rumors that your company is “in trouble.”
NEW WAY:The trusted advisor with print-industry experience commits to its confidentiality promise. We don’t release details about the business for sale until we find a buyer who is likely to be financially qualified to acquire and experienced in integration and growth strategies. In some ways, selling your business is like putting your house on the market. If the asking price is too high, it can remain unsold for months or years. When a house or business sits on the market too long, people will wonder and ask why it hasn’t sold.
OLD WAY: Expectations about exclusivity, closing costs, and how many months the owner will remain with the company after the sale are etched in stone. Not that long ago, business brokers demanded exclusive contracts and sellers were expected to pay all fees associated with enforceable business broker agreements. Plus, owners may be obligated to the contract regarding exclusivity as well initial and tail period provisions.
NEW WAY: The focus is on creating a win-win transaction for both the seller and the buyer. Everything that affects the M&A process is discussed and costs are negotiable. Read and understand the contract provisions proposed by your M&A team of advisors. Have your attorneys that specialize in M&A activities provide an opinion to you prior to the commitment.
OLD WAY: You will need to pay brokerage fees if you have signed a broker listing agreement. Make sure that the broker is insured and licensed if required by your state. Ask your engaged broker about any additional professional services fees that you will need cleaned up during the seller’s process. And be curious what may happen when something goes wrong during the transaction process.
NEW WAY: You can achieve significant time and broker commissions and finder fee savings by engaging the LaManna Consulting Group. Working together, with the LCG team, we investigate and follow up on key details so they don’t get overlooked and you get prudent advice from experts who understand the print industry transaction process.
Overlooking critical details during the buy-sell process will be costly — not just in time, opportunity, and money, but also in terms of relationships with your family, partners, and employees.
What Hasn’t Changed
What hasn’t changed about the process of selling a family business are emotions, such as the fears, doubts, and conflicts you will experience. If you don’t do all of the right things, selling a family business can be an emotional roller coaster before, during, and possibly after the process.
When I started the process of buying our family’s business from my father in the 1980s, my father had a clear vision of how he wanted the business to continue. He also wisely brought in multiple experts in their fields. These strategic experts helped calm some of the emotional turmoil caused by the different expectations of the 24 family members who had a stake in the deal’s outcome.
Although selling your business might not involve quite so many stakeholders, things can and will get rocky. Ongoing changes in economic conditions, regulations markets, talents, and taxes have made selling a business much more complex than it used to be.
My best advice is to develop relationships with professionals who know all the right moves. Work with people who have knowledge and experience in M&A strategies, integrity, and familiarity with the print business.
Even during uncertain times, I know that buyers are always out there. Buyers are eager to find good companies with the potential to build their investments and become great companies.
At LaManna Consulting Group, our purpose is to educate you about how the M&A process works today, encourage you to take action, and empower you to make the most of the next chapter of your life. To learn more, explore our blog, check out our videos and podcast. Better yet, just call me with specific questions about how our team of deal-flow experts can help you successfully achieve your business strategies and objectives.