Picking the right buyer is difficult, especially if you have multiple suitors in play at the same time. The highest price isn’t always the best bet in the context of total seller benefit. We’ve closed dozens of transactions where the highest price didn’t win. We educate business owners up front to pay close attention to good cultural matches. When you meet potential buyers, ask yourself if you can see yourself working with this group every day for a prescribed period post-closing. Do you share similar value systems? What’s their historical track record of retaining org charts, building out infrastructure, etc.? What do their platform groups or previous holdings say about them now? At S&P Capital Partners, we’ll go through what to expect and what questions to ask below:
Do they appreciate what it took you and your team to build your business?
Investor groups with a keen sense of business ownership will pay attention to the company culture you’ve developed. Culture takes time to build and cannot be constructed overnight unless you’re the Army Corps of Engineers or a unit of Roman Legionnaires. Investors want to know how the org chart flows. How do you interact with the management team? How long has everyone been here? An organizational chart with a minimum of 5 years tenure on average eliminates a lot of questions that an org chart with an average of 12-18 months will create.
Can they lay out their vision for growth and ultimate transition?
You’ve been at this for a long time. You know this industry and your team better than anyone. You might feel like you’ve hit a productivity rut, or you may feel like you’ve hit the perfect equilibrium. Sometimes you might get bored without new and innovative opportunities. Investors bring a new sense of growth potential and an expanded vision.
How do they acknowledge input from current team members?
Good transactions are built on trust, integrity, respect, and good faith commitment. They’re not easy to close and transition at any dollar amount. Combative relationships generally don’t improve throughout a transaction, leading to discord post-closing that adversely impacts business operations.
Strong Balance Sheet and consistent track record of performance?
Well-funded buyers lead serious groups who pay top dollar for valuable holdings. We investigate investor group funding decks before making seller introductions as part of our potential buyer onboarding process. You can rest assured that when we make an introduction, the buyer group has completed the following steps every single time:
- They’ll have signed our non-disclosure agreement that carries depth and weight
- They’ve met with our team and have walked us through their investment criteria, discussed their acquisition portfolio, and their current lending/limited partner relationships.
- They’ve met with our team and have agreed to participate in our transactional process, which is streamlined for efficiency and precision.
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