One of the many aspects of closing a deal is Momentum.
We try and explain this to business owners before we engage - because we know it's hard to run a business and sell it at the same time. Both are a priority. So how do you do prepare for this?
First, your banker must have a schedule. We call this our Deal Playbook. The Playbook is a set of milestones by date that tell us how, right up until a targeted close date, we're going to move through the various stages of a deal. It lays out the launch date, the date we'll gather and review initial interest from buyers, the dates we'll have management meetings, and the date we'll expect formal letters of intent. It will include preparatory items like information gathering for a data room, and financial and business updates.
When we build a Playbook like this together with our client, we're showing them the path to success, and having them participate in understanding the timeline to close one of the most important financial transactions of their lives. Got a big vacation coming up? It should be noted in the Playbook. Going to a wedding in Tahiti? Religious holidays? In there, and accounted for.
But the Deal Playbook also tells us how we'll act together, as a team. By knowing who is responsible for what, we understand the interaction that must take place. We set up a rhythm of communication and expectation that we hold ourselves accountable for. And we have to agree to it in advance, knowing full well that we may have to move a date here or there. But without a plan, and a finish line agreed to, I'm telling you, deals drag on. You lose momentum, bad things happen, and you lose deals.
Case in point is looking back at a deal I did several years ago. The Seller and myself agreed to a timeline. We kept to it. We held each other to it, leaving nothing on our side of the court - if there was something served to us, we hit it back as quickly as possible. In the end we got the deal done, very efficiently, at the maximum price. But that wasn't all.
Looking back, it's obvious now that the business had peaked, right when we sold it. And it began a slow decline. We would not attract the same buyers in decline. The story was different. We would not have sold at the value we did. Timing does matter - but had we NOT kept momentum......?
Because we had did have a plan, we and we did keep, we kept buyers engaged, and closed on time. We didn't wait on anything, from anybody. The business sold at maximum value, quickly.
If we did not sell at the point we did, the business would have begun its decline and it's likely we would have a much different story to tell.
Momentum maximized that owner's exit. Momentum kept buyers engaged. Momentum comes from pre-planning, setting dates down, agreeing how things will work, and executing to that.