I Wouldn’t Try To Sail Across The Ocean Without An Expert
Why take unnecessary risks when help is available?
And if I were selling my company, I wouldn’t try to do that without help either. There may not be sea monsters anymore (although who knows?) but I don’t know enough to know what I don’t know about sailing, much less a big journey like going across the ocean.
I’m glad to report that we’ve received many calls from landscaping company owners of every size and type wanting to know what they don’t know about calls they are receiving about selling their business. Often, the person calling wants to learn more about their company to see if they are a fit for them. Sounds innocent, but many times those are calls and emails are intended to collect information about your company and screen out those that are not a fit.
The owners may think that the signed NDA/Confidentiality Agreement, will be a solid protection, but why would you enter a conversation with no expert help when you don’t know where the potential hazards are and where the smooth sailing will be? If that owner isn’t aware of how to present his company in its best light, he could give information without enough context that he might have put himself into an unfavorable light for the future.
“What the human being is best at doing is interpreting all new information so that their prior conclusions remain intact.” — Warren Buffet
Private information about your company is worth more, in my opinion, than the information you will receive from a potential buyer in most cases. Are you trying to find out what your company is worth and what makes it valuable? There are better ways to get that information. Sure, if you turn out to be an attractive target for that buyer, they may come to visit you or otherwise engage you in conversation towards making an offer. That can be very flattering! Even to the owner of a larger business who is knowledgeable about these transactions.
My question is: how will you know if that is the best possible offer for your company? How will you know if this is a solid offer that will stand through due diligence? How will you know how the terms you agree to will affect the value of the deal? Have you done the research to know what your after-tax result will be after this transaction? How will you know how to negotiate for best “industry standard” terms for a company like yours? And even worse, how do you know that you aren’t going to be put in the “B” stack because you didn’t know how to sell the value of some part of your business? How much better will the result be if the owner is properly advised in this process?
I am also concerned that owners giving high level information, may later find their company is part of a database for that giant CRM that is being built to gather the private information about landscaping companies in the U.S. If you look your company up using Google, in less than a minute, in most cases, you’ll probably find a Zoominfo, or some other profile exists with information gathered. The information may be out of date (often very wrong) or just plain wrong because someone was guessing, or pretty accurate since you put it there. But there are other ways the information may be available for an AI engine to figure out your potential revenue, net income, number of employees, etc. Check out the references to your number of employees, the amount of your PPP loans, some other government filings, the technology you are using, etc.
The problem with that is that how you are presented is important. If you are not in control of who knows what about your company, you may not necessarily be presented in the most advantageous way to your audiences, especially to potential buyers (now or in future years). Recall the Johari window from an earlier blog posting:
The Johari window is a simple and effective model created by psychologists Joseph Luft and Harry Ingham in 1955 to assist us in working through some of these issues. The model describes the process of human interaction and allows us to see in four quadrants how we see each other and ourselves and can help us improve our “blind spots”.
Open Area = Public Knowledge. We pretty much can all see these things as can everyone else. (This is called Arena is some versions.)
Hidden Area = Mask. This is Private information that you share or hide from others.
Blind Area = Blind Spots or Blind Self. This is what others know about you that you don’t see about yourself.
Unknown Area = Unconscious. In this area, neither you nor others know these things.
Do you have any “blind spots”? We can and do help our clients know as many of those as possible (and take action, if needed) as you prepare to sell. If you’d like to discuss your situation, selling or buying a business or preparing your business for sale, please let us know.
In the meantime, if you have questions or comments, I can be reached anytime via email: [email protected] or on my cell phone at: 224-688-8838.
We’re here to help you Harvest Your Potential!
*Source, US Chamber of Commerce, and others, varies on the size of the business (larger ($30 million in revenue) could improve that percentage up to 30-35% of businesses. Still dismal.
