We did a favor for a friend and agreed to help a friend of his sell his micro-business. A nice little company, growing, but the owner has health issues. We said it was too small to take to market but we’d help on the rest of the process if he had buyers and boy did he have buyers. Like selling a car (or house) he had put the word out and got about 40 responses.
My first question was, has anybody signed an NDA? Of course not, so I gave him an NDA and about half the respondents signed it (and almost all didn’t respond once they saw the business overview and realized it’s work to run a small business). Throughout the process I got the feeling he felt this was like selling a car. Sign a title and off we go. But selling a business is so much more including (abbreviated versions of) the following:
- Complexity – the moving parts of a business are a lot different than the moving parts of a car, although in both cases the buyer wants to make sure all the parts are in good shape. Whether it’s the customers, employees, supply chain, or anything else it’s “Trust but verify,” which is probably President Reagan’s most memorable line.
- Frustration – selling a business takes time and often moves at a snail’s pace. Every little thing needs some back-and-forth and approval by both parties and their advisors. There’s no end to the questions buyers have for the seller and both parties have regarding the purchase and sale agreement.
- Legal – the attorneys keep it together in a nice tight package. It had better be a nice tight package given there are rules, regulations, and laws about how everything needs to be done, recorded, have the taxes and fees paid, etc. And when there are attorneys on both sides seeking to protect their clients… See the previous paragraph about frustration.
To summarize, there’s almost as much complexity in a micro-deal as in a $5-10 million deal and one reason is the owner is so important to the business and keeps most of the “secret sauce” in his or her head versus in writing. Finally, a big thank you to attorneys Ryan Carpenter and David Cook who took time from their very business schedules to represent the seller and buyer and get their part done efficiently and effectively.
“You have to laugh trouble down to a size where you talk to it.” Dan Jenkins
“I am fond of pigs. Dogs look up to us. Cats look down on us. Pigs treat us as equals.” Winston Churchill