The Verdict is In on the Sell Side: An Honest Conversation about the Future of Your Business
By Brian Goodhart, Director, M&A Advisory services
Over the next few weeks, I’ll be sharing a series of posts based on my webinar series “The Verdict is In on the Sell Side” where we aim to address the concerns and hesitations attorneys have when discussing business transitions with their clients. In this first post, we will focus on the importance of having an honest conversation about the future and how to approach this topic with business owners.
Setting the Tone: Tactful, Curious, and Respectful
These three elements are essential for initiating a productive conversation with business owners. Knowing that selling a business is often an emotional decision, it is crucial to approach the topic with care. Planning the conversation in advance will result in a more open and honest exchange. That openness and honesty is central to the next element, curiosity. By being genuinely curious and asking open-ended questions, attorneys can encourage business owners to share their visions for the future and personal intentions. The third and final element for setting the right tone is respect. Maintaining a respectful tone throughout the conversation helps put the owner at ease by acknowledging their challenges and achievements.
The Process and the Team: Understanding Transactions
Business owners often underestimate the complexity of transactions. That is why we must recognize transactions are processes, not events, and that they require a team. By helping business owners understand that transactions involve a series of steps and require specific professionals, such as accountants, attorneys can ensure a smoother transition. It is also important to assess whether the current team members possess the specialized expertise required for the transaction. By assembling the right team, we guarantee a much smoother transaction.
Satisfying Personal, Professional, and Financial Needs
When discussing a potential sale, attorneys should consider the personal, professional, and financial needs of the business owner. I recommend involving both a financial advisor and an accountant in having an honest discussion about the financial implications of the proposed transaction. By understanding and addressing these needs, attorneys can help business owners make informed decisions.
Avoiding the “Dirty Words”
There are several words and phrases that can evoke strongly negative reactions. Terms such as “exit,” “retire,” “walk away,” and “succession” may trigger emotional responses. Attorneys should exercise caution when using these words, ensuring they align with the comfort level of the business owner. Instead, focusing on phrases like “transitioning the business” or “moving to another phase of life” can foster a more positive and constructive conversation. I’ve also found that talking about the next generation can be very helpful in terms of focusing on the future.
While these conversations may not be easy ones to have, they are inherently valuable, and something that we need to start doing early. As we build rapport with business owners by using the right terminology and addressing their specific needs, we lay the groundwork for an ultimately successful transaction.