Mar 9, 2021
[3:16] — John shares the current trends on how to sell a
- They analyzed the data on pre-COVID value builder
questionnaires last November.
- The results showed that the pandemic had made material
differences on how to sell a business.
- Business owners are looking to sell 20% sooner, and they’re
looking to sell to a third party.
[4:50] — John identifies the biggest mistakes in selling a
- His book's whole idea was to provide a playbook on the best
practices in selling a business.
- The most common mistake is getting lured into a proprietary
- In this kind of deal, the buyer offers lower, knowing that
there is a lack of competition. They may also protract diligence,
leading to retrading or value diminishing.
[7:00] — Why businesses should create a market for their
- Creating a market for your company will guarantee that the
offer you’re getting is fair market value.
- Two to three legitimate buyers are enough to ensure a fair
[9:44] — John shares the effective process of planning and
- He uses the analogy of staging in home selling.
- Doing a "renovation" is a valuable strategic process. It is
building a transferable business.
- Process documentation is a big part of the renovation
[11:17] — John explains pre-diligence
- Pre-diligence is having answers to all the questions you might
be asked when marketing the business.
- Doing a full pre-diligence project ensures that the due
diligence goes smoothly. Also, it signals to the acquirer that they
have to compete with other potential buyers.
- Pre-diligence is having all possibly necessary documents on
hand and in one place, such as your leases or employee
- Documenting your processes prepares you for pre-diligence and
[20:26] — What’s the importance of having SOPs in how to sell a
- Having SOPs eases fears that business buyers have.
- Massively-acquired companies have tremendous resources and
people, making it easier to run after the acquisition.
- Individual investors, who often acquire small businesses, need
the checklists and a manual on how to run it themselves upon
[22:42] — The three types of buyers
- Individual investors
- Private equity groups
- Strategic investors
[24:30] — How to gain leverage during the negotiation
- Signing a no-shop clause will make you lose your leverage in
- Before signing a letter of intent (LOI), ensure that the
acquirer is aware of the other competing offers.
- Make sure you negotiate any conditions that are vital to you
before signing the LOI