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Danger in the Wild Wild West

“I researched these guys before the first call. They seemed legit, and I could tell they weren’t on a fishing expedition. They knew a ton about my industry, the players, and opportunities. You think they might be a real buyer for my company?”

I felt sorry for Angie. She looked tired, and running this company was nothing she had bargained for. But when her husband went AWOL on the family and business, she had no choice but to take it over. Seven years later, with three kids in high school, Angie had stabilized operations and was making really good money. “It’s been successful, I can send the kids to college,” Angie explained, “but I feel I’ve done all I can do. I either need to bring in outside capital or sell the company to a larger player who can do more with it than I can. I’d love to go back into teaching, my first love.”

Angie had called me after receiving an unsolicited outreach from a Chicago-based private equity firm. She explained how the firm’s interest seemed to be more real than the usual trolling calls she gets frequently. “When they told me about their recent acquisition of one of my competitors, a company in Kansas City, I got kind of excited. They said my company was the perfect add-on. I’m not sure what that means, but it sounds like the exit I’ve been looking for.”

Angie asked me to explain how the selling process might play out. I told her the first step is to send the financial data they requested (she was wise enough to get an NDA before any discussion started). But I had to be honest with her, I told her what happens next is uncertain. Will they submit an indication of interest, want to come visit Angie and see her operation, or engage in a laborious series of back-and-forth questions? I told her I’d seen her situation many times, and I’ve seen it play out differently. She asked me again, ‘what happens next?’ but all I could tell her were the different ways I’d seen it play out. In other words, there is no defined process that every deal seems to follow.

Selling a business, even if the parties are sophisticated and have expensive advisors, is a Wild West experience. There are few rules, there is no sheriff to enforce principles of fairness, and it’s hard to tell the good guys from the bad guys. Angie will have to decide if she wants to enter the process alone or have someone like me ride alongside her. I told her I could not guarantee the selling process would be easy or reach an acceptable conclusion. But I did tell her it would be smart to have somebody like me help her through the desert, avoid the Indian tribes, and know how to cross the raging rivers.

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Tennessee Valley Group

Jim is an attorney (non-resident status with the Missouri Bar) and though he no longer practices law, he has read and negotiated enough legal documents to fill a cargo tanker. He has an MBA from Harvard Business School and knows how Wall Street and private equity operates. Jim is a Tennessee Supreme Court Rule 31 listed general civil mediator with tons of experience helping business owners (large and small) work through sensitive problems to achieve winning results. He is the author of "Home Run, A Pro's Guide to Selling Your Business, Seven Principles to Make Your Company Irresistible."