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Avoiding Seller’s Remorse after an M&A Transaction

July 27, 2022
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What is seller’s remorse?

Seller’s remorse describes the feeling of regret after selling a commodity that carries sentimental and financial value to the seller. While many may recall seller’s remorse when selling their house or car, M&A firms deal with the phenomenon on a much larger scale. In our industry, we help business owners who have started, built, and grown a business. They have made major sacrifices over several years of ownership. By the time they initiate our services, they have likely decided that it is time to sell their business and move on. 

While selling is a natural phase in the lifecycle of a business, it doesn’t make selling any easier when financial contingencies and emotions are involved.  Entrepreneurship can be taxing on many aspects of an owner’s life. When they finally decide to sell, they often feel a loss of identity or purpose without the business. 

Seller’s remorse can strike at any part of the M&A sale process; it doesn’t only strike after the deal is closed. Instead, many sellers begin to experience remorse when they are already deeply involved in the transaction. This often causes them to question the deal and sometimes, even back out altogether.

Why does seller’s remorse happen during the M&A sale process

Seller’s remorse happens for several different reasons, and oftentimes, they are not the same for every business owner. By and large, starting and building a business requires sweat equity and emotional capital. This reality undoubtedly leads to regret and remorse, where business owners are concerned about the continuation of their organization. They may find themselves asking questions such as: 

  1. Will the business survive without me? 
  2. What will I do once the business is sold? 
  3. What will happen to the employees? 
  4. Am I doing the right thing? 

How can seller’s remorse be prevented or alleviated?

With a solid plan, a trusted advisor, and thoughtful preparation, seller’s remorse is easily avoidable. 

Have a good reason to sell

Selling a business is a huge milestone, probably up there with getting married or having children. Before you begin the selling or transaction process, think intently about why you want to sell. Your reasons for selling may be multifaceted; burnout, retirement, new ventures, declining health, or major personal changes leave room for life after the sale. When considering the reasoning behind selling, owners should prioritize sustainability. In other words, will this reason(s) hold up before, during, and after the sale? Will it hold up 5 years post-sale? If so, then seller’s remorse is easier to avoid. 

Find M&A advisors you trust and get educated about the M&A sale process: 

Your relationship with your M&A advisors is one of the single most important aspects of the transaction process. When seeking an advisor, you should keep several requirements in mind. You’ll want an advisor with a rich, diverse track record spanning multiple industries. They should have recent M&A experience in the current market climate. Most of all, however, you should find an advisor you trust. In doing so, you can be assured that they will bring strategic buyers to the table, present your business effectively, and communicate assertively and diligently on your behalf. A trusted M&A advisor will leave no stone unturned; you’ll leave nothing on the table. 

Furthermore, your trusted, expert advisor should help educate you in every stage of the transaction process. They will prepare your business to go to market, help manage your expectations, help you articulate your needs, and assist in any transition or post-integration strategies. Armed with an intimate understanding of the transaction process, you’ll surely feel confident in your decision to sell. 

Set realistic expectations

Make sure you look at the sale from the perspective of the buyer. Your idea of what the company is worth (likely inflated by emotions) may not match up with the ROI for the buyer. Oftentimes, buyers look at the current state of the business. This may differ from the seller’s perspective that the business will do well in the future. Ultimately, how they do in the future is up to the buyer. Thus the buyer’s ideal value may not align with the seller’s ideal value regarding projected growth. Instead of setting unrealistic expectations, set specific, personal goals for the transaction itself– focusing especially on what they want out of the transaction in the first place. 

Understand what a positive outcome looks like

When sellers do not take the time to figure out what their needs, wants, and desires are from the sale, they are bound to face seller’s remorse. Comprise your top criteria in priority order, then work with an advisor to determine options inside each criterion. For example, owners should know how much they are happy with walking away from the sale, what they expect during the transition period (how much they will be involved post-sale), their plan for financial security after the sale, and a plan for a post-ownership life. This “expectation road map” serves as a guide for the seller moving forward that they can reference throughout the entire process, keeping what they want visible and in front of them at all times. 

Avoid seller’s remorse & find peace of mind with Persient

Our Southern California-based team of M&A advisors is here to help ensure that you are proud of the legacy you leave behind. By leaving no stone unturned, our process makes sure that you get the most out of your business when you decide to sell. We know what it’s like because we’ve sold our business before and been on both sides of the table. While we understand the emotional implications of selling, we also have an intimate understanding of how to maximize every stage of the M&A process. We are proud to help business owners in San Diego, Orange County, and globally feel confident in their decision to sell their greatest asset. Get in touch with our team of expert M&A advisors today.

Investment banking services and securities offered through Independent Investment Bankers Corp., a registered broker-dealer, Member FINRA / SIPC. Persient LLC and Independent Investment Bankers Corp. are not affiliated entities. FINRA Broker Check.

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