Should You Entertain That Offer?

Here are the two extremes we’re trying to navigate in this hypothetical. On the one hand, you don’t want to ignore opportunities to be acquired so you don’t pursue any of them and nothing happens. On the other hand, you entertain any outreach you receive, hoping to find that needle in a haystack. Both of those aren’t in your best interest: thinking there’s no chance, or dating opportunities in desperation.

To avoid both extremes,

• Be open to opportunities.
• Make quick judgment calls about which ones to pursue.
• Approach the first one(s) as a student.
• Limit your investment in the sale.

Let’s take each of these in order.

Be Open to Opportunities

If you are open to opportunities, you listen to conversations differently. Maybe you’re grabbing a drink at a bar after a meeting, and the head of another firm which you’ve been working alongside drops a hint. Normally you might just brush it off as someone who is complaining about their situation in a moment more transparent than usual. But if you do this right, you’ll have mounted an antenna in a strategic place and tuned into a specific frequently to be alert when those signals crackle to life. Maybe you don’t say anything in the moment, but file it away and then, later, bring it up and ask if there’s something to explore.

But the main reason to be open to opportunities is because often the best opportunities surface organically, apart from an active search that you might be conducting or someone else is conducting for you. You aren’t as likely to force those opportunities, which means you’re more likely to walk away when you should. It can make a ton of sense to hire a firm to pursue a sell-side search for you, but that’s not the only way things happen.

Make Quick Judgment Calls

You don’t want to get bogged down in chasing something that’s not real, either. I always express this as dating marriageable people, and that’s what you’re going to look for: signals that this might be good.

Even though all the small talk at the outset helps you gain vital insights into a buyer’s motivations and uncovers the real culture of the place that you might join, why do all that unless it’s going to actually happen? You’ll never know if it’s actually going to happen until it actually happens, of course, but at this stage you want to uncover whether or not you even want it to happen.

So alternate between the small talk and the big stuff. Find out if they really want to pay for this and if they have access to the money. See if this is “transaction worthy” at the outset, and if it’s not, then skip all the nonsense and go on with your life, departing as friends who flirted with an option but made a quick decision to not pursue it seriously.

Approach Early Opportunities as a Student

There are ways that you can be prepared (like reading “Selling Your Professional Service Firm: A Primer” or talking with people who have been through it), but there’s nothing quite like being in the actual conversations that might lead to a sale. You’ll learn some things about yourself, about your real motivations, about how close you are to actually ceding control, how attached you are to being your own boss, what you want for your team, and a few dozen other things.

You’ll also learn about the questions that a smart (or dumb) acquirer might pose, how your hesitations might be interpreted, and where an outsider might perceive your strengths and weaknesses.

Best of all, you’ll model the actual conversations that need to take place. You’ll see how the way you thought you should say something doesn’t really land, and you’ll do a better job next time of articulating a particular position that doesn’t create an unnecessary reaction in a buyer.

Keep Your Business Strong

Another way to think of this is what sales trainers say: to not overly investing in the sale. That references the natural tendency for a seller to dream about their new life, with more cash and fewer responsibilities. A new day during which they can bask in the neighborhood crowd admiring that you’ve “landed the plane” and had a successful exit. You have reached this point where, for the first time, you’re willing to let go, and so you play with that new reality in your head.

But here’s the danger. If you count on this particular transaction happening, you’re quite likely to defer some of those big decisions that your business is really going to need if the deal falls through. One of the most difficult days you might face is waking up to the stark realization that this particular transaction is not going to happen, after all, and meanwhile all the big initiatives at your firm have stalled. And now things are even worse than before and you don’t have a savior on the other end of the line.

You didn’t fix that situation with the problem employee who “quit and stayed” but still controls some important client relationships, you didn’t build that new capability that your market keeps asking you for and will go to your competitors to get, your lead funnel is as dry as ever, and your engagement is at an all-time low.

So, be an eager, confident student when a possible good fit comes along, but keep minding the store while you entertain it. If the opportunity warrants it, treat it with the respect that it deserves, but in the back of your head, keep running your firm as if it won’t materialize.

Summary

Be open to opportunities that surface organically. Trust your instinct and decide quickly whether something is worth pursuing. Play one out, if it’s a real option, to learn what that world is about, but always keep running your firm well to give yourself the leverage to walk away from it.There’s a heightened amount of M&A activity at the moment and a small portion of it is worth your attention. And so if an opportunity does fall in your lap, should you hire an advisory firm right away? No. It’s too soon to spend money on that, and you want to experience the buyer’s culture directly, first. Look for an upcoming article on how to navigate that first opportunity.