This is the counter article to what I wrote in July, about business buyers and my Rotary projects given we recently I had a Rotary Global Grant approved for our ongoing work in Antigua. As I was writing the grant, I realized there are a lot of similarities between our project, the grant process, and our day-to-day work with clients buying and selling businesses.
Objective – We must articulate, in detail, what our project hopes to accomplish to get a grant approved. In our case, it’s supplying technology and training teachers on how to reach their students more effectively with said technology (versus using a 3’x5’ rolling blackboard). A business seller must know if the proceeds from the sale are enough for their next great adventure in life, what that next great adventure is, and what they want from a buyer, which is usually to sell to someone who will take care of their employees and preserve their legacy (and pay them).
Team – Last time we had 14 students (who setup the computer labs and Wi-Fi networks) and 10 adults. We get a lot done. Sellers need to build a team and it should include a financial advisor, transaction attorney, CPA, deal pro, and other experts as needed. Others could include a Quality of Earnings pro, and environmental consultant, and an HR pro to make sure all employee issues are in compliance with local, state, and federal laws.
Money – Our project gets donations from at least three Rotary clubs and a foundation tied to Antigua that loves not only what we do but that we get results. We then triple it with a Rotary Foundation grant. Sellers not only need to know the price but the net after tax and fees (it’s not what you get, it’s what you keep). And then it’s when the seller gets the money. Upfront, over time, and/or get more if the business grows (an earnout).
Timing – We run our project on tight timelines. Grant submission, approval, shipping by a certain date, travel when the students are on break, etc. Unfortunately, too many owners aren’t on a timeline. They wake up one day, flip the (proverbial) switch and say, “I’m selling.” As in my book, If They Can Sell Pet Rocks Why Can’t You Sell Your Business (For What You Want?) the more preparation an owner puts into their business the more they’ll get for it.
Implementation – Once our grant is approved, we start implementing. Actually,s we start prior to that by securing computer and other equipment donations. We can’t use grant money until final approval and some years that meant buying things the day after approval. The same goes for sellers, once committed, take action. If all the prep was done right it will go faster and smoother. And the chances of seller remorse decrease exponentially (versus the owner who shops the business with no skin in the game to see what the market says it’s worth).
Secure agreements – The Antigua Ministry of Education and others must sign a Memorandum of Understanding agreeing to their responsibilities. For a Caribbean country I’d say they’re pretty good. What do sellers need? A good management team that will sign employment agreements with the buyer (if asked), a landlord willing to give a long-term lease, loyal customers (with or without contracts) who don’t shop price, and, ta-da for 2021, suppliers who can actually supply.
Administrivia – When I look at all the little things we have to do to get 24 people to and from Antigua, students hosted by local Rotarians, lodging, cars, activities, little supplies we don’t know we need until we get there, etc. I wonder how my friend Jeff at Newport High School and I do it while having work and families. Because sellers are running a business – and running it as if not selling is so important – they need to lean on their intermediary, lawyer, and accountant to do the things those pros do regularly, even if it costs a little more.
What I illustrate above shows many things have common ground and other than the use of technology, not much has changed in decades. Buyers and sellers go through the same paces they did 20, 40, 60 years ago, only they have more tools to help.