Every owner loves their business. This makes selling their company even harder than it already is. But aside from the emotional turmoil that founders go through every exit, there are also a lot of intricacies included in the process. In this article, Russ Heddleston, Co-founder & former CEO of DocSend, discusses the challenges of sell-side M&A and how to navigate them.
"You don't need an exit strategy if you have a profitable company because you can always sell a profitable company to someone.” – Russ Heddleston
According to Russ, as a founder, it's hard to sell the business because owners can become very emotionally invested in the company. However, If there is an opportunity to sell, it means the company is doing something right. As part of his fiduciary duty, selling the company is something he always knew was possible, but comes with a lot of challenges.
Despite many challenges, owners can ensure they have a pleasant and successful exit if they have a great business model. There’s always a market for a great company, with good products, real customers and cash flow.
Furthermore, a great business will give owners options. Sellers will almost certainly get a good exit if they are not desperate to sell. Companies who are unprofitable are the ones who will have trouble selling.
Having some competition is also helpful, as it helps create potential acquirers. During sell-side M&A, having multiple bidders gives sellers some sense of the market rate for the company, which is crucial.
Distracting the business is the worst thing any seller can do during M&A. If the deal doesn't go through, then they will have to go back running the business, and it’s worse off than where they started.
The best way to handle the incoming diligence team is to make sure the company has strong leaders that the owners can trust to take care of the business.