When Jeff Spanbauer founded Relevate Health (formerly Healthcare Regional Marketing) more than 15 years ago to provide marketing services to the pharmaceutical industry, he couldn’t have envisioned the many ups and downs he’d face as a business owner. He never expected a worldwide pandemic to determine the company’s future. Covid-19’s challenges also brought opportunities, and Spanbauer brought on a partner via partial acquisition to help him scale his company in response to the pandemic.
Having settled a partial sale of his company to a private equity firm, Spanbauer now enjoys his seat on the board while his PE partner brings additional expertise and capital to grow the company. It’s the kind of transition many business owners dream of, but not all achieve.
Looking back, Spanbauer shares a few lessons learned that have contributed to his happy partial sale—and could contribute to yours!
5 steps to optimize your sale or partial sale
1. Get advisors involved early on.
“Every deal is different, so having some experts surrounding you is critical,” Spanbauer says. The type of deal that worked for a colleague or a competitor may not work for you. Seek to learn from experienced advisors, such as investment bankers or legal counsel, rather than evaluate potential deals on your own.
Jeff is grateful for Trelus, a platform that helped him acquire unbiased information about business sales that is based on the experiences of real business owners across industries.
2. Create a team that can run the business without you.
As many business owners learn, the process of selling can become a full-time job, especially once you near the end of the deal.
“If you’re going to sell your business, it’s going to take up a lot of time and energy,” Spanbauer says. He advises owners to ensure that their team can run the business in their absence when things get busy.
You don’t want to get caught with too many responsibilities at work and not enough time to tend the sales deal. This is one of the biggest sales jobs of your life. You want to give it your full attention if possible.
Begin preparing your business for sale well in advance.
Selling a business requires too much work to leave to the last minute. Spanbauer recommends beginning to prepare exit logistics as far out as 3-4 years before you hope the exit will take place.
That means start fixing problems early. Start strengthening company leadership early. Start envisioning how the business might need to change to fetch the price you want.
Part of this preparation process, says Spanbauer, is knowing what you want from a sale, or at least what you’re willing to accept. What type of leadership do you hope to bring in? What price point is too low? If you will fully exit, are you ready to leave behind the part of your identity that is wrapped up in this company?
Prepping to leave also entails emotional work in your personal life. Figuring out your financial and estate plans before you sell can be very beneficial to your family and philanthropic interests. Also, coming to grips with your diminishing role in the company and relearning what to do with extra time are not overnight processes. You can begin doing small things well in advance to make the experience easier in the long run.
3. Ask a lot of questions.
Ask questions, and listen well for the answers. Spanbauer acknowledges that as an entrepreneur, it can be hard to slow down and listen to other people without trying to rush ahead. But if you make a concerted effort to do things deliberately, you’ll receive valuable knowledge that makes the exit more successful long-term.
Part of this comes down to having advisors you can trust. Many resources on selling a business are written by advisors who have a stake in certain types of sales, meaning they’re less likely to give you unbiased information. When you find an advisor whom you trust to have your best interest at heart, be very attentive to what they want to teach you.
4. Don’t be greedy.
It sounds like a simple platitude, but Spanbauer stresses that greed can have very real and very negative consequences on a deal. This often happens when, instead of focusing on making a fair arrangement that benefits everyone, owners try to max out every possible benefit they can squeeze from the other party.
“I’ve seen people who get right to the goal line and end up blowing their deal, and then have never been able to sell afterwards,” he says. “It’s sad, because they were going to be very successful, but because they got greedy, their deal fell apart and then their business fell apart due to the distraction of selling.”
If you know what you want and what is fair, he says, it’s more important to find the right buyer than to get the highest dollar amount.
5. Benefit from the wisdom of others.
Spanbauer is just one of many business owners who have achieved positive exits or partial exits from their business using resources available through Trelus.
Trelus relies heavily on the wisdom of business owners who have been there before you. After conducting extensive interviews with former owners to see who was happy with their exit and why, Trelus has put together an objective guide to evaluating the sales-readiness of your building, determining what kind of sale to pursue, and envisioning your life after the transition is complete.
If you’d like more expert advice on selling a business, contact Trelus today.