In a trending discussion on Linkedin.com from the Business Succession Canada group shared by R. John Dolbec, Doug Robbins provides an excellent overview on selling a business and aptly likens the process to running a marathon (Selling Your Business is Like Running a Marathon). He describes the long and arduous process of selling a business from creating a team of professionals and preparing the business for sale through to the completion of the transaction. Like in a marathon, there are many milestones to reach and challenges to overcome along the way, each of which requires planning, perseverance and patience. As Mr. Robbins states, "The only sure thing is that selling a business is a long, arduous, and complex process that can never be called simple."
Key to a successful experience and outcome is choosing the right professional team to advise the vendor. This team includes an M&A advisor and a corporate lawyer, both of whom are critical to the successful conclusion of any divestiture transaction.
The M&A advisor is critical to preparing the business for sale. This includes designing an appropriate sales process, creating the confidential information memorandum and soliciting interest among prospective buyers. The M&A advisor also plays a critical role throughout the transaction in the negotiations, managing the due diligence process, managing the expectations of the buyer and seller, ensuring that each milestone is met and maintaining the all-important transaction momentum. In sum, the M&A advisor's role is to maximize transaction value for the seller and ensure that the transaction crosses the finish line.
The corporate lawyer also plays a primordial role in the sale of a business. In an auction context, the corporate lawyer's involvement often begins with providing input in the preparation of the confidential information memorandum, vetting proposed changes to the seller's form of non-disclosure agreement and preparing a template purchase and sale agreement for review and comment by prospective buyers. The lawyer also participates in negotiating the letter of intent and the definitive documents (including the purchase and sale agreement), facilitates due diligence inquiries, works in parallel with the tax advisor to maximize after-tax sale proceeds, seeks all necessary regulatory approvals and third-party consents, and finally, orchestrates the closing of the transaction (which can often feel more like a sprint to the finish line). In sum, the role of the corporate lawyer is to participate in negotiating and documenting the transaction documents and minimize as much as possible transaction risk to the seller.
As Mr. Robbins nicely sums up, "With a strong support team, careful planning, a long-term strategy and professional guidance, each step of the process can add value to the company and ultimately brings you to the finish line."[UPDATE] An earlier version of this post noted John Dolbec as the author of Selling Your Business is Like Running a Marathon. In fact, after corresponding with Mr. Dolbec, he noted that, while he did post the article to LinkedIn, it was in fact written by the founder and President of Robbinex Inc., Doug Robbins. The article has been corrected to note this fact.