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My Business is Hot!

They have been hounding me for months, they say my business is hot, and they really want to be in Nashville.

Sarah (not her real name) has paid her dues for over 25 years. She is being courted by a national competitor who wants to move into Nashville by acquiring her business. “I’d sure rather sell to them than compete against them,” she recently told me over lunch. “After doing this for two decades, I’m ready to sell anyway.”

Sarah reached out to me on the advice of a mutual friend whose business I sold about six years ago. Like all business owners beginning to think about selling, Sarah had a number of questions about the process. After all, she’s never sold a business and as she said, “I only have one shot to do it right.” 

One factor Sarah hasn’t fully embraced is that the potential buyer has made multiple acquisitions in their national expansion. I could tell she wasn’t thinking through it all when she said, “Jim, I’ve been told you are very good at what you do, but I know these guys want to buy my business, why do I need you? I know my business is hot right now, and I’ll be perfectly happy if they come through with the kind of multiple they were talking about when they came to visit.”

I tried to not make my skeptical eye roll too obvious, but I couldn’t help but feel a bit sad for Sarah’s naivety. Indeed, her business is “hot” knowing there are consolidators buying companies like hers all around the country. But being “hot” doesn’t mean the process will be easy or that she’ll be treated fairly.

I have never understood why an owner would want to go through the process of selling their business without the counsel of someone who has as much (or more) experience as the buyer. A seller does not know what they don’t know, and that “gap” will invariably cost them time, frustration, and, of course, money.

Right now, Sarah is full of confidence believing her business is hot and she’s gonna land a great deal. And indeed she might. I’ve seen this work out before. But there are a lot of ways it can go wrong, and if she can look beyond her confidence, she’ll recognize the upside of competent advice along the way.

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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."

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