Seller’s fatigue is a condition in which a business owner becomes emotionally exhausted and frustrated during the process of negotiating the sale of his or her business. When the conditions of the deal seem to be constantly changing or the same points keep getting re-negotiated, the seller may start questioning whether they really want to go through with the process.
While experienced dealmakers may believe seller’s fatigue gives them a negotiating advantage, this isn’t always the case.
Buyers and sellers should know these three things about seller’s fatigue.
1. It’s Real.
Buyers and sellers can both experience deal fatigue. But sophisticated buyers are less susceptible to deal fatigue. They have developed timelines and milestones to streamline the deal making process and are mentally prepared for the highs and lows because they have been through it before.
Sellers who are emotionally unprepared for the negotiations are the most likely to suffer deal fatigue. After years devoted to running and building their businesses, they feel personally insulted when a negotiator requests terms favoring the buyer. The seller’s overly emotional reaction to a standard business transaction causes unnecessary friction that only prolongs the process.
2. It’s a Deal Killer.
Exhausted sellers who simply want the negotiating process to end sometimes make irrational decisions. In a fit of frustration, they may abruptly walk away from a deal that was otherwise promising. This is a colossal waste of time and money for both the buyer and the seller.
A competent and experienced M&A project coach can act as an arbiter and remind both parties of how much they each stand to lose if they fail to bring the deal across the finish line. .
3. It Can Be Prevented.
Sellers who hire experienced M&A coaches and a qualified team of tax, legal, and financial experts are less likely to experience deal fatigue than a seller who chooses to go it alone.
A good M&A coach will advise the seller to stay focused on running and growing the business and let the team of advisors work through some of the sticking points of the negotiations.
The M&A coach will tell the seller what to expect during the process and urge them to stay cool, patient, and disciplined. The advisor may also help map the process and deal structure before negotiations even begin.
M&A advisors who have worked within a specific industry for years can tell both the seller and the buyer when certain terms in the negotiation may be unrealistic.
Getting Owners Ready to Sell
Because we have worked with many buyers of companies, we know that the likelihood of closing rises if the seller is emotionally and financially prepared for the process.
The process of selling a company goes more smoothly if the owner starts gearing up for due diligence two or three years before a qualified buyer is approached about a potential acquisition. Seller’s fatigue might feel so extreme if the seller has already anticipated what types of questions the buyer might ask.
Whether you are looking to buy or sell a company in the label, packaging, or specialty graphics fields, the LaManna Consulting Group stands ready to help. We can recommend well-prepared companies to buyers seeking acquisitions. And we can help younger, start-up companies understand what steps they should be taking now to insure the best possible deals when they feel ready to sell.
For more information, download our FREE whitepaper, Code Red: Seller Mistakes.