And this is not a knock on the magical powers of coffee.
Business owners are supernatural in many ways. They have immense wells of strength and passion that have carried them through all the stresses and pressures of owning a business. When we introduce the concept of deal fatigue as part of a sale process, we are often met with a smirk or a shrug of the shoulder.
However, it is important for business owners to know that deal fatigue is different than other forms of fatigue and it can affect you, as well as the decisions around a transaction, in ways you do not expect.
Working on a Sale Transaction is Like a Second Full-Time Job
The best deal teams will try to make it so that you, the business owner, are bothered only when it's absolutely necessary, because it is so important that the business continue to perform through the sale process. However, try as they might, there will be many times when you will be needed. The stress of operating your business, your investment banker telling you how important it is that the business perform flawlessly through the transaction, and preparing that business for sale will bring almost any human being to their knees.
There's An Emotional Toll
A business owner identifies a great deal with their company. This becomes magnified if it is a multi-generational family asset. Selling a business requires a detailed look at all the flaws and warts that every business has, and it can be difficult for business owners to remove themselves from this examination. Suddenly, the fact that your business lost a customer once in 1987 becomes something worthy of a fistfight.
It's Not Just You
Most business owners could probably handle the added roles and responsibilities created by a business sale, but what ends up creating the most deal fatigue is watching the burnout of your colleagues and employees. What is rough on the business owner can be incredibly stressful for the entire team. For certain, your CFO or controller will become overwhelmed at some point. Even your family may feel the stress of a transaction.
Why It Matters
Deal fatigue is real. The trouble happens when it starts to create decisions during a transaction that wouldn't really make sense in a vacuum. People get so tired and frustrated that they start ignoring important warning bells in their heads.
What Can You Do?
First, you need to acknowledge that deal fatigue exists. It is a very real phenomenon that, if you know it's coming, you can avoid in certain situations.
Secondly, use your advisors. When you are ready to just accept the purchase agreement as written even though your advisors tell you there are important points left to negotiate, listen to your advisors. Even if you are afraid that the other side is getting frustrated and will walk away, your advisors are in a better position to judge when the right time is to concede. It's usually not when you are at your most frustrated.
Third, set up status calls with your deal team. A call can help you understand what's happening behind the scenes. You might even be pleasantly surprised at the movement that has been made without your involvement. It will also help to resolve seemingly unresolvable issues as a group.
Lastly, make sure your transaction has a timeline. For example, your Letter of Intent should contain a period of exclusivity and everyone should be working toward an agreed upon closing date. Without a timeline, deals tend to wander and parties get frustrated. I have heard clients say that an anticipated closing date "creates fictional anxiety" around a timeline that we could most certainly adjust as a group. However, that timeline will also keep you sane. You must have a yard stick to know if things are moving along at the appropriate speed.
Deal fatigue is real and it can have material impacts on a transaction. Acknowledging that it will happen to even the most hardened entrepreneur is half the battle. Using your deal team appropriately will help alleviate negative impacts related to fatigue and frustration.