Around 2019, Edward Saxon, CEO of Conco Systems, and his four siblings were running the business as equal partners when they recognized it was nearing time for a change.

"All of a sudden we woke up one day and realized we are all in our 60s and the runway was getting short," Saxon says. "And first I said, 'I'll be happy to go. I've been running it. You guys can have a shot.' They got together and said, 'We don't want the shot.' Two of them wanted to go and do their own thing.'"

Having heard stories of deals run without professional help that fell apart, Saxon decided to enlist the help of an investment banker. That was a big help, he says, because not only do they bring buyers to the table but they do a lot of work getting the business prepared, putting a CIM (confidential information memorandum) together, helping owners understand where the real value is in their business and adding value beyond what the owners recognize.

Kevin Wills, an attorney with Babst, Calland, Clements and Zomnir, says when someone is looking to sell a business, one of the first things they should do is look into the potential impediments to doing a deal. That could include a shaky organizational structure, a complicated cap table, issues with unanimous consent, any convertible notes that need to be dealt with, or any rights of refusal.

"A fundamental transaction, like the sale of the business, usually triggers rights in people that aren't operating day-to-day, and you don't always think of those people," Wills says. "So, if you got a family-run business with three family members mainly running it but the next generation of grandkids have trusts that are already in there and they have to consent to everything, you want to make sure you don't have rogue holdouts that could hijack your deal or leverage better terms for themselves. You want to make sure that you're in a position to sell, from a structural standpoint."

Wills says customer contracts should be in place, even when business has been continuing without one in place, and that consent for any IP or software that's licensed is obtained so that it can travel with the deal.

"You want to make sure that before you start going to people and saying, 'Hey, we're ready to talk about business,' that you understand what could prevent you from being able to do your transaction," he says.

Conco Systems did its roadshow, bringing potential buyers to Pittsburgh. The company received 15 good offers. Saxon says they interviewed nine that met or exceeded the minimum, and chose a group that wasn't the highest but had made a solid offer. That began the next stage of the process.  

"We started repeating everything we did with the broker," Saxon says. "The data room stuff just makes you crazy because you got it from stuff we had originally put together, then you got the attorneys for the buyer and then you've got the quality of earning guys from the buyer and none of them like to look to the room to see what's there, so you're getting four and five requests for the same pieces of data. And every time you're sending it you're thinking, 'I'm just giving them another reason to cut the price.'"

The deal was getting close to close and then Saxon says things unexpectedly started to turn south.

"It wasn't that they were ghosting us or anything, but it was constant nitpicking — 'What are you going to do here,' and, 'This value isn't what we thought this was at,'" he says.

Saxon set up a meeting with the potential buyers in Atlanta and unexpectedly met someone new. Through the negotiations, he was told he had been talking with the decision-makers, but it was clear that the person he just met was "the man behind the curtain." That meant being re-asked many of the questions he had answered before but without a firm commitment, so he decided to walk away from the potential deal and regroup.

He connected a second group of potential buyers with much better chemistry, which led to a deal that closed. Now the company is growing, having recently made an investment in a small testing company, is adding more people and expanding.

Mike Livanos, managing director at Stellex Capital, says a well-prepared seller makes for a much smoother process with fewer surprises along the way. That happens in part by preparing for as many potential questions as possible that could come from a buyer.

"Put yourself in the perspective of the person across the table and anticipate," Livanos says.

Additionally, while many buyers will want to know what has happened over the business's recent past, as well as the story that goes with the numbers, they also want to know what's expected to happen next.

"We're looking for the next five to 10 years," he says. "In my ownership period, usually five to seven years. And then for the next person that I'll sell it to, I've got to sell them the next story. So, I'm looking 10 to 15 years out. A family business is usually prepared for what they know, but they're not yet prepared for what comes next. It's the best family sellers that prepare for that."