Dealing with Anxiety Through the Sale Process

DMY has supported dozens of practice owners with the sale of their practices over the last few years, and feelings of anxiety amongst owners are common.

Understanding when they are most likely to occur, and how to best manage them, can lead to a less stressful experience and better outcome.

Making the Decision to Sell

Obviously, this is the first step in the sale process and can often be the most stressful.

• Is now the right time?
• Who is going to buy my practice?
• Will they pay what I think it is worth?
• Will my clients and team be well looked after?

…These are all common questions that we see potential sellers wrestling with in deciding whether to sell. The reason why this can be such an anxious time can be summed up in one word: uncertainty. Uncertainty because there are no definitive answers to these questions until the sale process is well underway.

To help manage anxiety caused by the inevitable uncertainty at this stage of the process, DMY recommends speaking to experts and other practice owners who have sold, taking time to understand the market and build trust in the sale process. 

Deciding on the Preferred Buyer

This is where the rubber hits the road. As the seller, you have met a range of buyers and now need to choose just one. Anxiety can often rear its head again here, particularly when there are a number of potential buyers still in the running.

• Am I making the right decision?
• Should I keep looking for someone better?

A common issue is that sellers can easily mix up general anxiety (at the thought of selling) with specific anxiety (directly related to one or more individual buyer). To help overcome this, DMY encourages our clients to evaluate potential buyers through three critical lenses:

• Can I work with them?
• Will my clients be able to work with them?
• Will my team be able to work with them?

If the answer to any is “no”, then that is a red flag and we would recommend to our clients not to proceed and keep looking for the right buyer.

Due Diligence

Many clients tell us this is one of their least favourite parts of the sale process: the preferred buyer has been identified; commercial terms agreed; and a Heads of Agreement executed. The Vendor can start to visualise their new future with confidence…

…Only now there is a relative stranger (the buyer who you have only met four or five times) sending you a detailed list of information requirements and asking to review your processes and a sample of client files. It’s not surprising many Vendors have told us it feels like they are back at school waiting to have their homework marked!

The difficult part of due diligence for Vendors is that they typically only see downside risk:

• What if the buyer decides that they want to pull out?
• What if they want to re-negotiate the price?

The reality is that only a very small minority of deals fall over or get re-negotiated at the due diligence stage. The ideal outcome, and what most commonly occurs, is that due diligence is a time for buyers to validate not discover ie validate what the seller and broker have told them up to that point in time and what they have read in the Practice’s Information Memorandum, not discover one or more material issues which they had wished they’d known earlier.

Sellers, be transparent and have faith in how you have run your practice. Buyers aren’t looking for perfection. But they do want honesty.

Contract Drafting

As the seller, you really are on the home straight at this point. Everything you have been working towards is coming to a head, and your new future is within touching distance…

Contract drafting can be a fraught process if not handled well: legal fees can rack up, frustrations can arise (on both sides) and even questions as to whether the deal should still go ahead. All of this can be exacerbated if the Seller and Buyer are not maintaining a regular dialogue. If not managed well, this can be a time when anxiety reaches a tipping point.

DMY encourages our clients (the seller) to help reduce this late-stage anxiety by appointing lawyers with the right experience and proactively managing them to focus on what’s important, staying engaged in the contract drafting process, and keeping direct lines of communication open with the buyers. If issues arise and they become stumbling blocks with the lawyers, we recommend it is often better handled between the seller and the buyer with a focus back to the original intent agreed between the parties in the Heads of Agreement.

The Wrap

In summary, it is perfectly normal that selling your practice will provoke anxiety.  And this anxiety can occur at several stages of the sale process. Understanding where and why, and taking practical steps to mitigate it, can make for a less stressful experience and deliver a better outcome.

The majority of practice owners have built their practices over many years by drawing on their reserves of resilience along the way, and it is this resilience that will carry them through this final act of selling their practice, and through to their bright new future beyond!

To discuss this article in more detail and what it may mean for your situation, contact one of DMY's Directors below:

Mark Emney

Mobile: 0434 079 530
Email: mark@dmyassoc.com.au

Daniel Jones

Mobile: 0401 493 773
Email: Daniel@dmyassoc.com.au