3 Be clear on what you want for yourself, staff and clients
Sometimes vendors are brought into a transaction because of special circumstances, such as a health issue. At other times, they feel now is the best time to get the most money for their business.
But it is important to be absolutely clear on what is most important for the business and business owner after the transaction, as this allows the vendor to move forward with conviction, says MacNee. "It's good practice to be really clear on what you'd like to achieve out of a transaction."
If it is the best deal the vendor is after, they can enter a more formal process, which is typically reserved for larger deals and can take the form of a type of "horse trading", where the vendor accepts pitches for the best deal from multiple potential buyers.
But he cautions advisers to think about the implications of such a process. "That can be a tiring process," he says. "I've seen those processes run on for nine months, with no substantive work actually being done.
"So as a vendor you're exhausted — you've met more than 10 people, and you've had to do small talk and exchange information, and do the IM [information memorandum] and then narrow it down.
"And it can sort of drag things out and take you away from the business itself. But again, you probably only have that for some substantial size."
4 Keep your business growing
Business owners should not take their foot off the gas just because they know they will be selling or they have entered a formal process, says MacNee.
If an underwriting decision was made based on a certain profit, at the moment the deal completes, the profit should be that size or bigger, he insists.
"Probably the worst thing that you can see is a transaction where the vendor's trading has deteriorated over the period. Because then that might need to be repriced, or the underwriting might not work," he says.
5 Accept that a buyer won't want to take on too many risks
Sellers should understand what the risks are that a buyer will not be prepared to take, says MacNee.
"There can be a lot of saving time with heartache or angst if people can appreciate that," he says.
This includes an understanding that if a business is going to be run as a going concern post-sale, then profitability matters, as without it any financing, and ultimately the deal, can fall apart.
"The business will need to be profitable to make the financing work, so that everyone gets what they need out of the transaction."
