Most of the people we buy from have spent twenty or thirty years building one company. The valuation matters, but it is rarely what keeps them awake. What keeps them awake is the plant, the people in it, and whether the name over the door survives. This page answers those questions before you have to ask them, including the parts owners do not enjoy hearing.
You can sell all of it, or sell most of it and keep a minority stake alongside us. Almost every owner we have bought from chose the second, and in four of our seven exits the retained stake was worth more than they expected the entire company to be worth when we first met.
It is not generosity. An owner with money in the second transaction tells us things a seller with nothing at stake does not — which customer is fragile, which manager is carrying the place, which piece of equipment is closer to failure than the maintenance log suggests.
If you would rather take all cash and walk, we will still buy the company. But we will ask you why, and the answer usually tells us something useful.
Some buyers tell an owner that nothing will change. It is the most common untruth in this business, and every seller who has been through it once can hear it coming. Here is what actually happens.
Including us. An owner sells a company once and a buyer buys one every year, and that asymmetry is the single biggest disadvantage you carry into the room. These seven questions close most of it.
Committed fund, or raised per transaction? If per transaction, who holds it between signing and closing, and how many times has that process failed?
Many firms send a partner to the first meeting and an associate to everything after. Ask who signs, and whether that person will still be involved after closing.
Not a reference the buyer selects. Ask for the full list of companies acquired, and pick one yourself.
Ask for it in writing before the letter of intent, not after. A buyer who cannot answer in specifics in week two will not have better answers in week eight.
An honest buyer has a horizon and will say it. A buyer who says "we are long-term investors" without a number is avoiding the question.
The upside case is always presented. Ask for the downside: where does your retained stake sit in the capital structure, and what happens to it if the company misses plan?
A buyer who cannot name anything has not done this often enough, or is not telling you the truth.
Most owners contact a buyer when the process is already underway and an intermediary has set the calendar. By then the answers to the questions above matter less, because the decision has narrowed to price.
Enough time to fix the two or three things that reliably cost sellers money: unaudited records, customer concentration, and a business that cannot run for a week without the owner in the building.
A conversation is not a commitment, does not start a clock, and does not require a teaser, a banker or a non-disclosure agreement. We have had first conversations that led to a transaction four years later.
Some owners are better served by an auction, a strategic buyer or by not selling at all. We will say so. Twice we have told an owner to wait two years, and both companies sold for materially more.
Nothing leaves the four partners. We do not contact customers, suppliers or employees at any stage without your written approval.
Dan Sheridan takes these calls himself. No teaser, no bankers, no obligation, and nothing that commits you to anything.
Contact Dan directly