Merger & Acquisition Insights

2 Mistakes You Can Easily Avoid When You Have An Interested Buyer

Posted on August 14, 2020 by Fusebox Marketing

America runs on the backs of the hardworking, transportation and logistics companies. After years of running a business that you have built from the ground up, there can be a moment when you begin to prepare for the next phase of life. Running a business within the transportation industry is a high call and demands a special person for it to be successful. While you may be an expert when it comes to the operations of your business, managing a sale of a company could send you into uncharted waters. As you navigate a sale, there are two important mistakes that can be easily avoided as you work alongside the buyer.

1. Communication – Respond promptly and respectfully in all correspondence when providing information to a buyer.

a. The market is competitive – buyers lose interest. Response times should be days, not weeks.

b. In advance of embarking on a business sale process, it is important to ensure that the operational & financial reporting capabilities of your business will help the transition process, not hinder it. Can you prepare materially accurate accrual basis internal financial statements within 30 days after month-end? Can you present the current state of your fleet? (units, mileage, est. fair value, etc.)

c. Pricing & Terms favor sellers who are able to demonstrate effective management of their business by quickly responding to buyer requests.

d. Be respectful in all correspondence. Do not take offense to any information requests or offers provided by buyers – politely decline if you are not comfortable providing certain information (i.e. customer details, rates, etc.) early in the process or not interested in entertaining pricing/terms set forth. Always keep the door open for future conversations

2. The “Lone Wolf” approach is extremely demanding.

a. Although you may be an expert when it comes to your business and how it operates, an M&A transaction environment is a different world. When entering a transaction environment, you must consider the outside forces also at work. As a business owner, you handle the running of a business, existing job opportunities, and personal/family life. Adding an M&A transaction presents another very demanding task to your workload. Handling the sale of your company alone is a draining process that will require an extreme amount of effort and time. Piling an M&A transaction process on top of your preexisting duties is more than most people can handle. Surround yourself with a team that has dedicated themselves to help complete the transaction and you will notice its worth immediately. If you choose to hire outside resources or decide to internally go through a transaction process, having a team to work alongside you can help to lighten the load and allow you to avoid making a mistake within this tedious process.

At Tenney Group, we have the privilege of working alongside these hardworking businessmen and women who are looking to prepare for the next phase in life. For the past 47 years, we have been trusted advisors to transportation and logistics companies across the United States. We aim to assist business owners through this process and through our experience, we help to avoid common pitfalls that can hurt your companies’ value in a transaction. As experts in the transportation and logistics industry, we want to work alongside each of our clients so they can seamlessly transition to the next phase of life.

Tags: Selling a Business

Category: Articles