Tip 6: Avoid Deal Fatigue

Deal fatigue is a condition in which buyers or sellers or both feel frustrated, irritated, or exhausted as negotiations drag on. It happens frequently with business owners who are going through the process of selling their business. The more time you’ve spent preparing your business for sale, the faster it will sell, and the less likely you’ll experience deal fatigue. 

If you’re an entrepreneur, you’re likely already familiar with fatigue when trying to accomplish a major objective in your business. For example, you may have spent 50 to 100 hours trying to recruit and hire a senior manager only to be let down at the last minute by the leading candidate. While this goal may be critical to the success of your business, at some point you’ll experience fatigue and will be susceptible to taking shortcuts to accomplish your objective. In this example, if the references on your last potential hire didn’t work out, you may simply hire the next applicant and only perform a rudimentary interview and skip reference checks. You end up taking shortcuts because you become fatigued. This fatigue dramatically affects the quality of your decisions because you don’t have the energy to maintain the initial standards you set for the objective.

The same issue of compromising your initial standards can happen when selling your business. The more buyers you communicate and negotiate with, the more likely you’ll experience fatigue at some point. So, how do you prevent deal fatigue while creating a strong negotiating position? 

Spend as much time as possible thoroughly packaging your company for sale. By investing time preparing for the sale, you help ensure it unfolds smoothly and quickly, which greatly reduces fatigue. Your CIM and financials should be as accurate and thorough as possible to anticipate the most common questions all buyers will ask. This reduces the number of clarifying questions you’ll receive from buyers, which helps preserve the amount of energy you have to invest in selling your business. 

You can also experience fatigue from negotiating with one buyer. Again, the more time, money, and emotion you invest in any one buyer, the greater your sunk costs will be, and the more likely you’ll be seriously disappointed if the buyer renegotiates the price or terms or backs out altogether. Now imagine if this happens with multiple buyers back-to-back when selling your business. At some point, you’ll burn out and begin taking shortcuts and sacrificing your standards. Here, again, the best option for avoiding deal fatigue is preparation – by preparing your business for sale, you minimize the chance the buyer will discover a material fact they can use against you during due diligence.

Sophisticated buyers are aware of the natural tendency of business owners to experience fatigue as the process wears on. They may take advantage of this by drawing out the process and nibbling at the last minute. Avoid deal fatigue by developing as many options as possible and maintaining your positioning and emotional objectivity. Always have other options available in case the buyer attempts to renegotiate the price.