The Importance of Building Personal Relationships In M&A

Welcome back to another edition of The Wise Exit!

I'm Brian Dukes, a Managing Partner at Exitwise.

In today's edition, you'll learn:

• The importance of building personal relationships in M&A (and how they can make or break a deal).

• How to sell your construction business in 9 steps (and maximize your exit value).

• What a business broker does (and whether you need one when selling your business).

Let's dive in ...

The Importance of Building Personal Relationships In M&A.

1. Strategic Advantage.

When it comes to mergers and acquisitions, having options is crucial. The presence of multiple interested parties can significantly strengthen your negotiating position as a seller. Not only does it provide a backup should one negotiation falter, but it also empowers you to negotiate more assertively and secure better terms.

But beyond the strategic value of having multiple buyers, there's another factor that can make or break a deal: personal connections.

2. Relationships Matter.

Building strong personal relationships is often a critical factor in the success of mergers and acquisitions. These relationships can provide insights, foster trust, and facilitate smoother negotiations between parties. They're particularly valuable in navigating the complex dynamics and challenges that often arise during M&A processes, providing a direct line of communication and an ability to resolve issues as they arise quickly.

Solid personal connections can be the linchpin in securing a deal, especially when formal agreements are bolstered by the goodwill and mutual respect developed through these relationships.

We see time and time again that having a deep personal and/or professional connection matters most when getting into the dog days of a transaction. It can literally be the difference between pushing through to complete a deal OR deciding to move on when times get tough.

3. Emotional Readiness.

But the importance of personal connections extends beyond the negotiation table. The emotional aspects of selling a business are profound and often overlooked. For entrepreneurs, the sale of a company is not just a financial transaction but also a significant emotional event.

Preparing yourself and your family for this change is crucial. By openly discussing the potential impacts and changes that might arise from the sale, you can help mitigate the emotional turmoil and ensure a smoother transition for everyone involved.

In M&A, relationships matter. By investing in building strong personal connections and preparing emotionally for the transition, you can set yourself up for success – both at the negotiation table and beyond.

Featured Blog 📰

Selling your construction company is a complex and nuanced process that requires the right expertise to navigate. From determining your business's value to finding the right buyers and negotiating terms, there are many steps involved in ensuring a successful sale.

In this featured blog post, we walk you through the 9 essential steps to sell your construction business for maximum value. We cover everything from hiring the right experts and preparing your financial records to marketing your business, conducting due diligence, and finalizing the sale.

Read the blog post: [9 Steps] How Do I Sell My Construction Business?

ALERT: We have several construction company buyers and sellers in our marketplace. Email me if you are interested in hearing more about selling or acquiring a construction business.

M&A Tips from Brian Dukes 💡

As you plan to sell your business, you might keep hearing about business brokers. But what exactly do they do, and do you need one?

Business brokers act as middlemen, connecting buyers with sellers. They can help with valuations, negotiations, and screening buyers.

While brokers can be valuable in certain situations, they also have some drawbacks:

1. They're often generalists, lacking the industry-specific knowledge to maximize your exit.

2. They tend to cast a wide net rather than targeting the most qualified acquirers.

3. They usually work on commission, which can lead to misaligned incentives.

The most important thing is understanding what you're getting from a broker and knowing who to trust. At Exitwise, we help founders and business owners assemble a team of industry-specific M&A experts who will maximize your exit.

Don't settle for the first broker you meet – they may not be the right fit.

For more M&A tips from someone who's been there, follow me on LinkedIn.

That's all for now.

Tune in next Wednesday for another set of M&A lessons, and have a great rest of the week.

Best,

Brian Dukes, Managing Partner