Merger & Acquisition Insights

3 Ways to Transform Lives Through Your Business Sale

Posted on January 28, 2020 by Spencer Tenney

“You told me my goals for my business sale may evolve as we got further into the sale process. You were 100% right.” These are words from a recent client who successfully exited the transportation industry. What happened? What were his goals and how did they change?

60 days into the sale process, our client had seen six different offers. The difference between the highest and lowest offer was $40M. Each buyer proposed vastly different post-transaction strategies along with their offers. Our client realized almost all of the buyers could satisfy his financial objectives from a sale. However, he began to realize that squeezing every last dollar out of his sale was not the number one priority. He began to realize his transfer of ownership would affect many people in many ways. He wanted to be thoughtful with his decision and considerate of his employees, the buying party, and all of those in the community who may be impacted. Below are three ways our client used his business sale to not only win financially but also transform lives.

• He chose a buyer who really needed what he had.

Everyone wanted our client’s business. It was one of the most profitable businesses of its kind in the transportation industry. For one interested party, it offered the chance to create significant bump in the company’s shareholder price. For one private equity group, it presented the opportunity to tweak a few areas and sell in 3-5 years with a handsome return on investment. One buyer expected something different. He expected our client’s business to transform its future – for its people and its bottom line. This potential outcome was inspiring to our client.  A transaction with this party presented an exciting new chapter for the business and all the people involved with it – not just a bump in stock price. He wanted to be part of this buyer’s imaginative plan.

• He chose a buyer who provided the right home for his employees.

Why would a buyer leave over 10MM on the table? Simple. Because, when selling becomes close to reality, most business owners begin to see the broad impact of the transaction. In this case, the top bidder made it clear that all top management positions would be required to relocate 500 miles to another corporate location. His team was a tight knit group. At first, it sounded crazy to walk away from that amount of money. The closer he got to the closing table, he realized there was no way he could do that do that to his key people when he knew there was a better home for them with a different buyer.

• He chose a buyer who would allow him to profoundly impact the community he loves.

Our client was passionate about his community. I don’t know if he fully understood how much he cared for the people in his community until going through the sale process. It humbles and centers most business owners. So, two things became very important to fulfill his commitment to bless his community through a sale. A) Protect as many jobs as possible and B) Structure the deal so that the maximum amount of cash and personal time can be deployed to the causes he cares about following the close. Our client fully understood his responsibility to stay on for a reasonable transition period following the sale. He chose a buyer who kept a very clean deal structure (mostly cash/limited future payout) and a limited support period so he could be available to start his new chapter of life.

What is the takeaway? Whatever you are thinking about achieving through your future business sale is up to you. No doubt, you deserve every penny you can get. Keep in mind, though, you may ultimately be in position to do something really special with your business sale – something that not only meets your financial objectives, but also transforms lives. Think it through. You only get one chance to sell your transportation business. Sell it in a way that inspires everyone around you. That is when success becomes significance, and significance lasts forever.

Tags: Selling a Business

Category: Articles