How to prepare your business for sale: lessons from a successful SME exit

Corporate Partner, Chris Dobson, is joined by business leader Rich Pawlyn to discuss what really makes a business exit successful and why preparation for due diligence can make or break a deal.

Drawing on a real transaction they worked on together, Chris and Rich explore the journey from a failed sale to a successful exit, including a multi-year turnaround project, operational transformation, and the strategic preparation required to present a business clearly and confidently to buyers.

Their conversation focuses particularly on early-stage due diligence, what buyers look for, how sellers should prepare, and how getting organised early can reduce stress, protect value, and prevent last-minute deal risks.

They also discuss the human side of selling a business: managing emotion, aligning stakeholders, preparing management teams, and choosing advisors who add genuine value.

Finally, they look ahead to the future of dealmaking, including how AI and automation are reshaping data rooms and due diligence processes.

 Episode Links

• Visit our website
• Contact us

Transcript

Setting The Scene: The Failed Sale

Chris Dobson 0:03

Hi, my name's Chris Dobson. I'm a partner in the corporate team at Boyes Turner. I'm joined here today by Rich Pawlyn, who we worked with a couple of years ago now in securing a successful business exit. Rich has very kindly recently put together a case study which set out his experience of the process in general, but with a particular focus on the early stage DD process that comes with any business sale and the importance of getting ahead of the game in getting your ducks in a row and working through that early stage. So Rich and I are going to follow up his case studies today by having a discussion in a little bit more detail about the process and his experiences generally. So, Rich, thanks very much for joining me.

Rich Pawlyn 0:57

Thank you.

Chris Dobson 0:58

If you will, could you perhaps set the scene of the task that was assigned to you in terms of delivering an exit for your shareholders?

Rich Pawlyn 1:06

Yes,

Emotions, Objectivity, And The Middleman

Rich Pawlyn 1:07

of course. The business was a 20-year-old information business that sold mapping and geodata. It was successful in a way, low profit, year after year, always grew, did okay. But we got to a position where the chairman approached me following a failed sale of the business and really wanted me to look at why the business hadn't sold. They considered it to be a highly valuable business and were shocked that they weren't able to sell it. So all of the shareholders had got to a certain stage in their lives where they wanted to call time on their investment in this firm. And the majority shareholders decided that they wanted a third party to look at the business and come up with a plan to turn it around and to provide some value for them in creating an exit. And that was a four-year project. It was originally a three-year project, but COVID came along in the middle, if you remember. So that made it a four-year project. And I can go through later all the factors that we addressed in order to create value.

Chris Dobson 2:20

Yeah. It was an interesting one for me as well, because typically, if we're acting for an SME, nine times out of ten, our main clients are going to be the founders, the business owners themselves, which creates an interesting dynamic and a strain on their ability to run the process alongside continuing to keep the lights on within the business. And that's not to say that wasn't, of course, an ongoing job that you had to manage yourself as well, but it was an interesting one for us, I think, in terms of your position and in so much that you weren't a shareholder per se, but your position was was really interesting because, of course, the shareholders had placed a lot of trust in your ability to get the deal across the line.

Rich Pawlyn 3:01

Yes, and perhaps not so emotionally invested as other customers of yours, where perhaps they have a lot of family involvement as well. This was a little more third-party, and with some experience around consulting, I was able to come in and put together a plan that was that was able to take out some of the interpersonal emotion. And part of our working with yourselves at Boys Turner and our corporate advisors at Buzzercott was how we dealt with the emotional and interpersonal challenges as well as the business challenges to make the sale a successful one. Yeah.

Chris Dobson 3:42

Yeah, absolutely. And I think that again it was really key here because you talk about the emotions. It's hard, I get it, for any seller who has been the king of their own castle for decades, gets to the point where right at the end of their career, they are now being put in the position of, to an extent, being told what to do by a buyer and being in the hands of advisors who don't have the shared, potentially the shared experience of what they've gone through for many years. And so for many sellers, it's quite hard sometimes, as you say quite rightly to differentiate between the emotion of, but this is my business and I know what I'm doing, and I'm not having someone else who's only here at the 11th hour telling me that I need to do X, Y, and Z. And it's really hard for me to address points being put to me by a buyer who again doesn't know the business. In a way, it's also potentially comes across as kind of veiled criticism sometimes as to how they've been running their business. So that can be hard. So again, I think from your perspective, it was really valuable that you were effectively kind of a middleman in that process, right?

Rich Pawlyn 4:48

Yeah, and I'd learned from a previous

Planning The Turnaround And Exit Goals

Rich Pawlyn 4:50

transaction where I bought a software business and our vendor was exactly that character. And he found the due diligence process a very stressful, and in fact, the whole sale process incredibly stressful because he was used to people accepting his word and the process of selling the business where you have to document all of your business activity and your ability to create new products and your ability to deliver gross profit and so on. He found that very difficult because he expected the purchaser to take him at face value. And as a result, he was completely unprepared for the due diligence process to be as exacting as it was. So, in going into this process with this particular sale, I was determined that we would make sure that we documented the business such that we could provide our purchaser a much greater level of clarity around the business and not be having to rely on, well, you've got to take me at my word. Yeah. Because the reality is that the solicitors and the advisors on the other side of the fence are going to turn around and go, no, we're not taking him as his word. Because he's not being full frank and disclosing everything, we're actually going to assume the worst. So if you're a business person that goes into a sale of your baby that you've grown for 20 years and you think you can go through the process without you having to subdue that personal behaviour, you're going to come a cropper. So part of the purpose of coming up with the case study with Chris was to highlight to prospective sellers of their business that you need to take your personality out of the equation and understand that the buyer is doing exactly the same with your business as they would with buying a house. And the survey is the due diligence in the residential conveyancing process. In the business transfer process, assumptions will negative assumptions will be made if you leave room for confusion or if you're not full frank and disclosing everything.

Chris Dobson 7:08

Clearly, then, Rich, you had approached the process of the outset with thoughts as to how you were going to go about doing it. So what was your initial game plan? And then to what extent did this change or evolve as the process started?

Rich Pawlyn 7:22

Yeah, the initial game plan was just a typical project management process with starting with the end in mind. So I knew that the chairman had been very clear with me as to what he was looking for in terms of the overall game plan. This is how we want to exit. We don't want to have a residual shareholding that we're going to keep forever. We want a clean exit, we want cash, we want this, that, the other. So all of that was agreed up front. So I knew what I was going into, and I would advocate anyone in this sort of approaching this sort of sale that you have to spend an awful lot of time with your major stakeholders to understand really what it is you're being asked to deliver. Because just saying, oh, well, let's organise a sale of the business, that's not really clear enough. And in this case, it was a project. We knew that we had to turn the business around in terms of financial performance. We knew that we then had to create some real vibrancy in that business in terms of new product development, and we had to pivot from in-person sales to remote sales in the middle of COVID and so on and so on. So all of this was done one layer on top of the other. We also migrated the business fully from an on-premises IT stack to a fully cloud-based stack. All of that was

Building A Credible Management Bench

Rich Pawlyn 8:43

done within 18 months. And as important to the actual sale process of preparing for sale and getting the right advisors and so on, one of the really key components I expected and we delivered on was to make sure that the management team within the business were vibrant and were confident and could have conversations with our buyer. Because it's easy as a perhaps a sole business person, you've built your baby, as I've already referenced, for 20 years, but the buyer is looking for something else. They're not really going to just buy you because they just won't pay you a big multiple for that. They're really looking at the team underneath. How will they work in that new structure? How much confidence do I have in that management team to deliver and go on delivering new products and new value and so on? So for me, approaching this project before we'd engaged with all the professional advisors, I knew certain things had to be true. And one of those was really the condition of the management team and their confidence and the sort of confidence they would portray when put in front of prospective buyers.

Chris Dobson 10:07

Yeah. It's a really key point, as you say. I I had a really interesting chat with a corporate finance friend of mine recently talking about multiples. I say really interesting in relative terms, but for what we do for what we do, it was interesting. For me, I'm always interested as a lawyer to get more of an insight in terms of how different sectors, different industries attract different multiples. And one of my friend's points was actually, regardless of what the kind of business we're looking at is, one of the key metrics that any potential buyer is going to be assessing is as you say, Rich, it's the team beneath the founders. It's the the next generation of business leaders within that target company that are going to be sticking around and are going to be helping to drive revenue and growth going forwards. I was really interested actually by how much, you know, how much weight any buyer is going to put behind that. So it looked like you were very much in the right direction at that point.

Rich Pawlyn 11:01

Yeah, and I think this chimes with another part of the case study, which is that if you're scrabbling around last minute to pull together all of your due diligence, you're putting that management team under huge pressure. It's at that point where the management team needs to be exuding confidence. Yeah, we're going to hit these sales numbers. Yeah, we're going to do this. Yeah, we're going to do that. This is the we're going to deliver. They can't do that if they're working nights trying to pull together the basic information that you should have done 12 months before.

Chris Dobson 11:31

Yeah, yeah. So keep them focused and away from the grind. Okay, so you talked about it a moment ago, actually, you know, the process of picking advisors. Did you go into this process with a criteria for how you were going to select the professionals that you were going to work with? At that point, did you have any, in your own head, any must-haves or or red flags that you were looking out for during the tendering process? And if so, how would you advise sellers to approach

Advisor Selection And Power Dynamics

Chris Dobson 12:00

this stage?

Rich Pawlyn 12:02

I think you have to find advisors that are confident enough in their relationship with you to be brutally honest. So they got to a point in this deal where the corporate consultant asked me to go on holiday because I was becoming a problem. It was at a stage in the deal where there wasn't a lot going on for me, but I was so excited about pulling the deal together that I was actually getting in the way a bit. So to translate that back to your question, you need to find advisors that you're really comfortable working with. You can't do that in a beauty parade and then start the project the next day. So you need to find the time to invest the time to go through a process to find some partners, a legal partner, a tax partner, and a corporate sales, corporate finance partner that's going to work with you. And obviously, recommendation is a key one. But one of the things that I did with you, I remember clearly, was I asked you the same question as I'd asked Buzzercott, which was how are you going to add value to this transaction? What are you going to do? And I would advocate for all of your prospective customers that they should have that conversation about what are you going to do as a client and what are you going to do as an advisor? And how does that symbiosis come back to something that's going to be two plus two equaling five? And in our case, we talked about it at the board meetings. We didn't want to have a Magic Circle firm of lawyers, we didn't want to have a top five firm of accountants. Yeah. Okay, we're probably a bit too small for all of those guys anyway, but they were on the tender list and we approached a couple of them. I didn't want a firm of advisors of whatever type who were going to be aggressively assertive with us and say, this is how it's going to be, this is our this is our process, this is what we're doing. I thought your approach and out of Buzzercott and other advisors we had was much better, which was right, we get the project, we understand what you're trying to do, we'll adapt our service to fit that. The fixed fee element is this, the floating fee element is that. It meant that later down the track, when things got a bit sticky, we knew everyone knew who they were dealing with. And that was clear. So recommendation, value add, and lastly, I would say the the interview question that I asked and I would advocate all of your prospective customers ask is how are we, as the seller, going to maintain some power in this negotiation? Because we're selling to some bigger company and we're going to lose power because they're going to be the buyer and we're just minnows. So how's that going to work? And I thought that was really important and very satisfying for our board that as we went through the process, we would maintain some control so that they weren't strung along and everyone got bored and cross and all of the other things that come up during a sale process. So I would say those are my key watch outs.

Chris Dobson 15:46

Yeah. I from my perspective as well, I always I always talk to prospective clients about the importance of just feeling that you gel with your advisor. You know, it's a spoiler alert, but as we know, you you know you're spending more time with your advisors as a client than you are your own family towards the end of the process. So, above all else, I think as a as a client, you are quite right to make the assumption that any advisor that you approach knows what they're doing. As a basic point of hygiene, they know the law. If they're a corporate finance advisor, they know what they're doing in that regard. So the differential for me has got to be as a client, you're asking yourself a pretty, pretty basic question of you know, to what extent can I imagine myself having to, I'm receiving a phone call from my advisor late night. To what extent am I wincing at the prospect of having to speak to this person? Or actually, is it someone that's able to deliver the advice that anyone worth their salt should be able to do, but in a way which is palatable? And as you say, it's very much in line with how you as the client want the transaction to be approached in terms of tone, etc.

Rich Pawlyn 16:54

I think one thing that that lots of sellers forget or get caught out with is who is it that the lawyers are advising? Is it the individual, the majority shareholder, the company? Yeah, and it isn't always the same thing. And there can be some conflicts of interest in there at a personal level. In our case, we sorted it out up front and we worked out that actually your firm could advise the shareholder group and the company because it was essentially the same. But that isn't always the case. If you've got external investment, you may well have the unfortunate position of having to have one firm for one part of the shareholding and another firm for the company and so on. You need to get that sorted out.

Chris Dobson 17:39

Yeah. Yeah, you do. The the dynamics are always interesting, actually, on a deal-by-deal basis. We are on the other side of the table sometimes with you know mega international law firms versus versus uh other deals where you have much smaller advisors. So another another key thing for me as well, if you're a a business owner looking for an exit, is to have a think about, and you referenced it a moment ago where you did look at much larger firms, but there's going to be the right size firm or the right the right profile of advisor for your particular transaction. I would advocate if you're selling in a kind of a sub-25 million pound space, you probably don't need to be approaching an international law firm. I think you can get at the level of service from firms outside of London, for example, that's not to belittle bigger firms because they can do it. But I certainly have a think about your transaction and making sure that the advisors that you've got are going to really prioritize your transaction and treat it as a high, high priority bit of work for them as opposed to something

Right-Size Your Advisors For The Deal

Chris Dobson 18:42

that that might be kicked down the line because there's other bigger fish in play at the moment.

Rich Pawlyn 18:45

Yeah, and I think the individuals involved, you have to be a bit careful because the bigger the firm, the more politics plays within the firm. So I deliberately chose away from magic circle type legal representation because I actually wanted a partner to deal with it, not someone who wanted to impress a partner. You know, I wanted the partner to be representing us and maximising it for us rather than improving their career.

Speaker 1 19:07

Yeah.

Rich Pawlyn 19:08

And it's quite important that you understand that those factors do play even in your specific transaction.

Chris Dobson 19:16

Yeah, absolutely.

Getting Ahead On Due Diligence

Chris Dobson 19:22

In your case study, Rich, you mentioned that you were supplied with a standard due diligence questionnaire ahead of the process, i.e., this was before we actually received any information requests from the buyer. We at Boys Turner provided you with a set of inquiries which we were expecting any well-advised buyer would be sharing down the line. But we got you well ahead of the game in terms of sharing those questions with you so that you could start working through them. Did any of the questions take you by surprise in terms of the required detail that buyers look for on any transaction? And were there any key areas of due diligence that you think sellers should want to be made aware of as early as possible?

Rich Pawlyn 20:02

Well, I knew what was coming, but even though I knew what was coming, it wasn't so much surprise as kind of oh god, all right. Because you always underestimate the amount of effort needed to deliver due diligence answers. Yeah, I would recommend to anyone contemplating a sale of their business, do the same thing, create your own document store and then provide that to your buyer. Because if you give them the opportunity to ask you, you're on the back foot and you're trying to scrabble around getting your piece of information into their right box, which is their particular number. And logistically, believe me, it's a horror show. Much better to have a standard questionnaire approach where you have months to actually fill it out fully and then provide that through a data room to perhaps your short list of buyers. That way you've got the information in front of them before they've asked you. And that's a key component in making sure that you don't get discombobulated by them and their advisors.

Chris Dobson 21:17

Yeah, it's an interesting one because I think the appropriate from memory on our transaction, we supplied the information across to the buyers, you know, in the first instance. So they they had it. And then it's quite often a conversation we then have with the buyer's lawyers where they say, Thanks very much for providing all of the information. We've got our own questions, please. So rather than us having to spend the time and effort working through the information you've provided, can you now address our own questions? Which is a little bit, you know, sometimes you're like, oh, a bit painful. But because we'd already provided all of the information, and actually the questions that we'd asked, we knew were going to be asked maybe in a slightly different way, but they're all covering the same topic. So I remember at the time, actually, the exercise of transporting the responsibility. Responses to our own questions so that they fitted with the buyer's own questions was actually a pretty painless task in the grand scheme of things.

Rich Pawlyn 22:06

Yeah, and important for me, it meant that I could delegate that process of to my management team to say, right, you need to go into the due diligence portal. Yeah, you need to move these questions from the answers that we've given, take that, make sure it's still appropriate, but put it in the right box. That meant I didn't have to do it later night. I could spend my time concentrating on the sales story to our buyer and exuding that kind of confidence in the growth story that they were buying. Because there's a lot of other stuff going on within the buyer. And if you'll spend all of your time tangled up in fiddling about with documents and due diligence, you as the seller of the business are doing yourself a disservice.

Chris Dobson 22:49

Yeah. Yeah. Okay. And yeah, looking back in terms of any particular moments of eyebrows being raised at the level of detail that was being asked for or areas of the business that you hadn't considered might be looked at, did anything kind of jump out?

Rich Pawlyn 23:02

Well, I think in the case study I referenced

Standardizing Contracts And Key Risks

Rich Pawlyn 23:05

somewhat hilariously looking for the service documentation on the office boiler, which we didn't even run. I mean the landlords ran it. And yeah, I mean, yes, it's very tiresome, but I'll repeat myself, if you get yourself ahead of the game, you've got the brain space to deal with the tiresome bits. They don't become enraging, they just become annoying. Yeah.

Chris Dobson 23:26

Yeah. I would say from my own experience, areas that are commonly missed and can create tension or issues for a deal will be if your company has enacted a shared buyback at some point, that will come up very often, and lawyers acting for any buyer will be very interested to make sure that that process is being followed properly. So buybacks are a big point. It seems really obvious, but it comes up an awful lot of times where you ask the question to see copies of their contracts with their key customers, key suppliers. And in you know, so often the response is, oh, we we we don't have any.

Rich Pawlyn 24:02

Both yourselves and Buzzer corporate finance people said, Look, the thing that you're selling is the basket value of all those customer contracts. Yeah, you're not going to get the value unless you've got the contract. So anyone thinking of selling their business, there's a real watch out here. Don't allow your head of sales to go off and write an individual contract per customer or some crazy system which is non-scalable or or unique to individual companies. Institute, two years out, institute a standard contract that you sell everything through. Yeah, then it's predictable. Then your buyer doesn't turn around and go, hang on, this is an absolute mess. I'm going to downgrade my offer. You know, and and people selling their businesses, they go, oh, they agreed a headline deal and now they're welshing on the deal. Well, well, well, to be fair, is because you can't evidence the contracts.

Chris Dobson 25:00

Yeah.

Rich Pawlyn 25:00

So you've only got yourself to blame.

Chris Dobson 25:03

Yeah. I'd I'd say in addition to that as well, sometimes you just can't avoid it. I get it. If you have a relationship with a really important big customer, they're going to want to enforce their own terms on you. Okay. But we've also seen instances where it would have been very avoidable, but contracts with customers or suppliers that are fundamental to the business, albeit when the contract was initially negotiated, if a little bit of advance thought had been applied at that moment in time, it would have been possible to have negotiated out of agreeing a change of control provision, for example, with your key customer, which then running through the scenario of said contract being provided to the buyer late on in the process and the change of control being identified, it becomes an issue, right? And that's potentially then a roadblock to completion. Or unfortunately, it potentially sometimes results in said customer having to be told about what's happening before the deal's even across the line.

Rich Pawlyn 26:02

Yeah, I think it goes back to the starting with the end in mind. Yeah. If you if you intend to sell a business that's quite reliant upon a small number of high value customers, you better make

Openness With Staff And Incentives

Rich Pawlyn 26:12

sure you've got some pretty good evidence about those customers. Whereas if you're selling something which is more generic or perhaps you have much less reliance on one or two key customers, then a high level of standardization is desirable so that your buyer knows that each contract is the same, so that from an administrative perspective, they're not taking on a nightmare.

Chris Dobson 26:33

Yeah. Yeah. Okay, so we kickstarted the process of asking all the difficult questions. How are you supported internally in the business during the DD process? Because I I know and understand that for many sellers, it's obviously a very sensitive process, and you can't be telling all of your staff what's happening, but equally there needs to be a balance with continuing the requirements of the business on a day-to-day basis versus delivering an efficient DD process. How did you handle that issue yourself?

Rich Pawlyn 27:07

I think for a lot of for a lot of businesses, they try and keep this incredibly secret because they don't want to wobble the staff. But I took a completely opposing view to that, which was that I needed to have these, and we're only talking about 30 staff, I needed to have these 30 people all pulling in the same direction, in turn terms of the turnaround, in terms of being part of our sale story, and I thought on balance we should approach it on a basis of openness with our staff. So we deliberately set out to incentivize the staff as part of the sales process, and we messaged everybody so that they understood the reason the shareholders were selling was because they wanted to sell the business to a new business that could fund it faster, could grow it better, were professional owners of this sort of a business, and hand it on to, in a sense, be given wings. So that that story was one of openness, and we were criticized by our buyer for being too open. And I said, Well, no, that's the way it is. You can't put the cat back in the through the cat flap. They know we're selling, they know the story. So we're not going to keep this secret. Obviously, price and who gets what and all the rest of it, all that secret, of course. But the fact and to whom was something that we openly talked about. If you can trust your staff or trust your managers, do because the worst thing you can possibly do is be a relatively predictable MD or CEO, do your eight to twelve hours a day, and then suddenly your working pattern changes. You look, you've aged five years, you're working till 12 o'clock at night, and suddenly your staff think, Oh God, are we in trouble?

Speaker 1 29:00

Yeah.

Rich Pawlyn 29:01

And that behavioral change, you can't escape. People know, people understand. Because we'd gone with the openness, we were able to delegate a lot of the actuality to the management team and even below. And it meant that when our buyer came to visit us, I could introduce them to everyone and they could be happy that they they were. And this, I think, is quite an important thing. If your buyer is nervous about spending all this money to acquire you, they need satisfying that they're making the right decision here. And the more you can help them be comfortable with their decision, the more they're going to push it to their investment committee, the more this is going to happen. So I felt it was really important to be open. That meant my staff could engage with our buyer. And I thought it was all part of our story.

Chris Dobson 29:53

Yeah, and we're going back to our earlier point about you're telling a good story about what's going to happen with revenues post-completion. But buyers very often will highlight to the sellers their list of key staff, key individuals. Uh, and in certain examples, the buyer will seek reassurance that those individuals are locked

Handling Tricky Questions With Preparation

Chris Dobson 30:12

in post-completion. And actually, it becomes a condition to completion in in some cases, whereby we see actually a requirement to completion is that the buyer wants those individuals to invest in them going forward as part of the process that they, you know, they they want to see some skin in the game from these individuals.

Rich Pawlyn 30:27

Yeah, and I think you're a bit of a mug as an MD. If you get all the way through the process, you then ask your directors to sign a new service contract, then all of the directors turn around and go, Well, hang on a minute, you're obviously selling, so where's my slice?

Chris Dobson 30:40

Yeah.

Rich Pawlyn 30:40

You'd absolutely screwed yourself.

Chris Dobson 30:42

Yeah. So a bit of forward planning in terms of an acceptance that if you think they're a star, your buyer's almost certainly going to think they're a star as well. So tackle that, uh, tackle that earlier.

Rich Pawlyn 30:52

If you can, I I think for bigger businesses uh it's not always possible, even if it's desirable.

Chris Dobson 30:58

Yeah, yeah, no understood. Okay, so going through the the collection of the responses to DD, did you have any particular challenges in collating the information or any questions that you were just really struggling to address and ask and answer appropriately? And you know, if so, how was this overcome?

Rich Pawlyn 31:16

Well, no, not really. We uh because I'd sold a couple of businesses and acquired a couple of businesses before, I had a feeling I knew what was coming. And in this case, it was, I think, for all of us, it was reasonably plain sailing. But you're always open to some clever devil on the other side coming up with ever more inventive questions. What you have to do is keep your brain together at that point and answer them as best you can without getting caught into some horrific minefield of your own making. And I think that's where preparation in advance it gives you the brain space to work with your advisors to say, well, actually, hang on a minute, let's not answer that due diligence question in the way it's been posed, because I don't want to go down that route. Yeah. Oh, we we're gonna answer it this way, yeah, and that's gonna be satisfactory.

Chris Dobson 32:11

I I always think good advice to any seller is taking a a building metaphor, maybe measure twice, cut once. I've seen plenty of instances where we're looking at pretty substandard DD responses, and you know that actually if you were to put that in front of the person that's put together that response, you you could challenge them on that and say, is that really the best that you can give us in terms of a response? And actually, you're not really helping yourselves, you're not helping the process. If as far as possible, as a seller, you need to be providing your best effort in terms of initial responses to the buyer's questions because they're not going to go away. And if you just give a pretty, pretty poor average response, it's not closing off the point and it's just going to lead to further work and and more pain down the line.

Rich Pawlyn 32:58

Yeah, and what I think most vendors fail to remember is that asking questions is cheap, answering them is very expensive.

Chris Dobson 33:06

Yeah, indeed. Okay, so moving on from DD slightly, but again, your your your case study, it talks about your experience of previous transactions with the macho 20-hour days experienced at the end of the process.

Avoiding The 20-Hour Days

Chris Dobson 33:24

Did you find that there was a correlation between the early management of the DD process and hopefully creating an environment where we were able to avoid such painful long hours at the end of the process, or maybe it was still painful. What was your overriding experience, would you say?

Rich Pawlyn 33:44

I would say that we avoided a lot of pain by being organized up front, but because we'd got ourselves organised, we gave space for other things to happen during the deal. And we, as you remember, got caught up in some shareholder approval processes which were horrible. But we would never have been able to resolve those so successfully and still hold the transaction to a certain set of dates. We just never would have hit the dates if we hadn't got ourselves ahead of the game. Because you're always going to have problems at the 11th hour, always. And you can't avoid that. What you can do is you can make space for the inevitable problems to be dealt with.

Chris Dobson 34:28

Yeah. A kind of an overriding memory I had from the transaction is that you were very good, Rich, at moments at being clear about the fact that look, I've got a you know, I'm all yours, but actually this evening I've got a commitment at home. I'm not going to encroach on that. So let's make the most out of the working day that we've got. Do you know what I mean? You were still very, very, very clear that look, this is the day job. I'm still going to make sure that I've got time to do that.

Rich Pawlyn 34:49

We know that you're we know that you corporate lawyers like to sleep during the day and only work at night. So for most business people, that just doesn't work.

Chris Dobson 34:57

Yeah, yeah. No, fair enough. Fair enough. Alright, so I would probably my final question, Rich, is looking back to what we've discussed earlier on, and it's quite a wide one, I guess, but having now gone through your most recent sale process, what are the lessons that you've learned? If you were to do it again, are there any key points that jump out at you in in you know to cover areas where you'd think I'd I'd do that slightly differently, whether that might be your criteria for selecting your advisors or it might be your your game plan during the process and how you reacted. Does anything jump out at you in terms of things you you do differently?

Rich Pawlyn 35:37

I think just the importance of taking your time, particularly if you are a majority personal shareholder in a situation like this, perhaps you are the main business manager and shareholder. Give yourself time. Find a a set of professional advisors that will respect your time, take your time to recruit the right ones. Uh avoid those who are so full of their own bravado that they want to refer you on to other teams to do this and

Lessons Learned And The AI Future

Rich Pawlyn 36:12

that and the other, when perhaps it's a very arcane argument. So go back to choose good advisors who you feel satisfied can work together. Don't appoint them separately because uh it's too easy for things to fall between two stools and you're the person with it all on the line, it's your money. You're about to be made one hopes very wealthy with your sale. It's been your baby, you care about it, you don't want to have lawyers and accountants and so on just messing it up for you because uh they're trying to persuade you to fit their specific uh uh hobby horse or their uh try and win some tiny uh legal point of principle. You guys never did that, and it was great. We had a much more pragmatic relationship, which was here's our objective, these are the things that are gonna happen. We're at this stage in the deal. We could do this, we could do that, we could do this. Your best advice is to do that, and we navigated through it and negotiated a good outcome, but we'd have never done that if we'd chosen professional advisors that just really felt so good about themselves that they were gonna spend all their time, you know, trying to persuade us how brilliant they were.

Chris Dobson 37:38

Yeah, you're absolutely right, Rich. I think uh a key thing for anyone looking to appoint advisors is identifying someone that's there to negotiate a deal rather than, as you say, someone that's looking for an opportunity to have a bit of a legal dust-up over a point of principle that's probably gonna be irrelevant. Yeah, I think and not helping anyone.

Rich Pawlyn 37:56

Yeah, and and I think my final point was one that has really only struck home to me in the last few weeks, which is that the advent of AI means that your data room, your deal process is going to be parsed by agents, by automation. So I think if you are planning to sell your business in 26, 27, in the next few years, you'd better be ready to have your data room in a technical structure which will allow the bots to do a lot of the work. If you've got a higgledy-piggledy right old mess in your data room, it's not gonna work. And your buyers, solicitors, have bid for the work on the basis that you can use automation, right? So if that all goes wrong, it's gonna impact the timetable for your deal. So I think anticipating how technology is going to impact upon the sale process is something that's gonna become ever more important over the next 18-24 months.

Chris Dobson 39:05

Yeah. Yeah, I I you're absolutely right, Rich. Again, with AI, I think as a positive, yeah, we are going to be we're gonna be moving away from old-fashioned legal debates because clients are not gonna be interested in in that. Because if, as you say, if the technology is there to effectively just validate the information that's across from the other side and equally pull together transaction documents that can be will be negotiated in a much more efficient manner going forwards. So the human input, in terms of, as you say, just get your house in order and allow technology to do its job is never going to be more important than it is now and going forwards. Yeah. Okay. Rich, that was really, really interesting. So thanks. Yeah, thank you very much for your time. And I hope I hope those listening have have found it as interesting as I have. Thanks very much.

Rich Pawlyn 39:56

Thank you.

Chris Dobson 39:58

Thanks for listening. If you're interested in checking out more of our episodes, then please go to the Boys Turner website. You can also follow or subscribe wherever you listen to your podcasts.