Newly retired John Chesnutt, who recently sold A&R Ironworks, says it was five years ago that he started to build a plan to retire.

"And when you own a business, it's a little involved," he told attendees at the Atlanta Smart Business Dealmakers Conference. "It's not like you can send a retirement notice to HR, have some cake in a couple of weeks, and then ride off into the sunset."

Instead, he says he spent a couple of years looking for his direct replacement, and even made a couple of job offers without success. After a period of procrastination, 2020 came and with it two events that encouraged him to accelerate his plans. One was the pandemic, the other was a medical diagnosis.

"In July of that year, my wife was diagnosed with breast cancer," Chesnutt says. "Now, this part of the story has a very happy ending. She is doing fine; loves being a grandmother. She's doing terrific. But it was an important galvanizing moment for me because I realized, well, kid, if you want to spend any time in retirement with this lady, you need to get on with selling your business."

That, he says, led him to reach out to a professional to list his business for sale. But before then, he says he spent time thinking about how he wanted the deal to look. He came up with three key principles.

"The first idea is deal personality," he says. "Every deal is unique. Every deal has its own personality. The deal generally rests on the shoulders of the principals and the rapport they develop between one another. So, there's some motivation here to develop a good relationship with the other side. Play nice is the takeaway."

Something informing his thinking on how to approach the transaction was the conceptual difference between short- and long-term relationships. In the former, the parties know that everything is negotiable and it's unlikely another deal will be done together. It means each party could be as devious as they'd like in a zero-sum game in which any dollar discount one party gets is to their advantage and at a direct disadvantage to the other since the long-term consequences don't matter. A long-term relationship implies more than one transaction, which changes the logic completely.

"Now you see partnering, people wanting to work together, you're trying to get a good deal. But it's important to you that the other side believes they're fairly treated," Chesnutt says. "However you act in this transaction, that will come back to visit you in future transactions. If you act badly, it will come back and haunt you. If you act like a prince of a person, the odds of doing the next deal are much higher. So, in a long-term relationship, you're motivated to find not just what's best for you, but for what's best for the other party as well."

In his eventual deal, there were three basic components: cash consideration, debt in the form of a seller's note, and a small piece of equity in the new company. The latter two pieces essentially committed him to another three to five years working with the eventual buyers. So, by definition, he would be in a long-term relationship.

"And psychologically, what that did for me, I want to be on the same side of the table with the party on the other side," he says. "I want to work problems together to solve whatever is standing in the way. It's a collaboration, it's teamwork. It was the No. 1 most important thing for me. You want to be the kind of person the other party really wants to deal with. That's your goal. That will guarantee you the best possible outcome."

Another important strategy he says is number integrity — making sure the numbers say what you mean and mean what you say.

"Deals are hard enough to do when the numbers are spot on. Never mind when the numbers are flimsy or misleading or, heaven forbid, flat out wrong," he says. "The downside of putting in funky numbers is you do run the risk of having the whole deal blow up on you. So, for me it was a strong theme. I wanted my numbers to be as accurate as possible. If you're working on the sell side, this needs to be part of your holy gospel — get those numbers tight."

In 2020, despite the pandemic, he says the company was having a phenomenal year, exceeding industry standards in terms of performance, revenue, margins, and more. So, he says he was hoping to position his company as best-in-class with superior performance that would enable him to command a premium price. Having rock-solid numbers was integral to that strategy. So, he told his accountant that he wanted audited financials that year.

The other concept he considered was the notion of deal momentum and how to sustain it. He says he had set for himself a 24-hour standard — any requests for information, analysis, reports, etc., he turned around in under 24 hours.

"Deal momentum is easy to lose," Chesnutt says. "And from the sell side, we don't control a lot. But I can control how quick I respond. And so, for me, that was vitally important being Johnny on the spot, be timely, answer questions candidly, keep the deal moving."

The transaction closed in about six months. He says he thinks it could have done it in three to four months, but those on the buy-side needed more time as some on the team were juggling multiple obligations.

In summary, he says: "All deals have their own personality. I encourage you to view these as a long-term relationship that warrant honesty, transparency, and collaboration, number integrity. Be intentional with your candid numbers. And finally, in terms of maintaining deal momentum, don't let anybody say you're slowing him down, or they're waiting on you for anything."