Getting Your Sale Across the Finish Line

**SPEAKER_1** (0:02)
Welcome to M&A Talk, the number one podcast on all things related to mergers and acquisitions. Brought to you by Morgan & Westfield, a nationwide leader in mergers and acquisitions for small to mid-market companies. We bring you exclusive interviews with industry experts in business sales, valuation, private equity, investment banking, and more. It's our mission to provide you with insight and guidance on how to build your company's bottom line and maximize value for eventual sale. Here's your host, Jacob.

**Jacob Oros** (0:35)
This is M&A Talk. My name is Jacob Oros, your host and president of Morgan & Westfield, a nationwide M&A firm. If you're selling a company and you'd like to schedule a free consultation and work with me directly throughout the process, you can navigate to morganandwestfield.com and schedule a free consultation, or if you'd like a free copy of one of my recent books, The Art of the Exit or Acquired, you can send an email to podcast at Morganand, and you have to spell out the and at westfield.com, and I'll send you out a free copy of one of my books.
Joining us on the show today is Jason Hullender. He's an M&A advisor in Texas, and we're going to talk about managing your expectations when you sell your company, and trust me, this is a very important show for you to listen to. You might think, okay, this sounds like it's more for advisors. Trust me, it's not. A lot of deals die because of misaligned expectations, and we're going to talk exactly about that. Jason, welcome to the show.

**Jason Hullender** (1:44)
Thanks, Jacob. Glad to be here.

**Jacob Oros** (1:45)
Managing a seller's expectations.
For us professionals, I think we know why that's important, but what does an owner of business need to know about that? To an owner, they might think, okay, why does this interest me? Why should they pay attention here? Why should they listen?

**Jason Hullender** (2:04)
Well, I guess first thing is, they've never gone through the process of selling a business. That's important because they've done a lot of things in their lives. They've run businesses, they've managed people.
They're good at, I guess, being a technician in some cases, but they've never sold a business before and done it successfully like an experienced M&A advisor or broker or investment banker or whatever we call our titles we give ourselves. So, managing the expectation usually starts with understanding the value of the company. Many times we find sellers want to overvalue their business. They've heard rumors that people got multiples of revenue or they think this is like selling a publicly traded company, where we're selling it based off multiples of revenues, not multiples of their free cash flow or profit. So, having to educate a seller on that part of the process is what we have to usually end up doing first around valuation. And it's always a good idea to hire a professional valuation company that can value the business for fair market value, not just for partnership disputes and other things, but just kind of get an enterprise value of the business and then talk to somebody who can explain how to manage the process of going out there and then educating that client on what the process is going to look like.
Because they think, well, we're just going to go out there, we're going to maybe talk to a buyer, and they're going to make us the offer of the lifetime, and we're going to sell our business and go off into the sunset. But what reality is, it doesn't usually go like that, and there's quite a bit of a due diligence involved in finding out what's really under the hood or all the skeletons in the closets.

**Jacob Oros** (4:19)
How many of your deals, do you think, die because of expectations, misaligned expectations?

**Jason Hullender** (4:26)
I would say the vast majority of deals die because of not aligned expectations.

**Jacob Oros** (4:34)
I know on my side, that's very, very common.
I don't know what the number is, probably a third or half. It's pretty substantial. It's a pretty significant number. When I say that, that they die because of expectations, what does that mean to you? Can you give me an example, perhaps, of a recent deal that died on your side due to expectations?

**Jason Hullender** (4:57)
Well, I guess, well, first off, if the seller's expectations are too high, the value of the business, that's going to limit a lot of the potential buyers coming in and looking at that deal in the first place. So those deals, a lot of times, don't ever even get started until expectations come back down. But then, I guess, sellers not understanding what's involved in the due diligence process with a buyer. And then, deal fatigue starts setting in, and people start getting frustrated, and then they find ways to sabotage their own deal.