Why SDR Doesn’t Participate in the Competitive Bid “Bake Off”

When business owners are ready to sell, it’s not unusual to see an “RFP,” request for proposal. Prospective sellers announce they are looking for an investment banking firm to help. Come one, come all. You might call it a “cattle call,” we refer to it as a “bake off.” This is where sellers interview a handful of investment bankers over a one or two-day rush and make a selection. Just like that.

No matter what you call it, this isn’t SDR Ventures. Making a 24-hour decision after a lifetime of work makes no sense to us.  Bottom line, successfully choosing someone who will help you through the most complicated, most lucrative and life-changing process you’ve ever undertaken doesn’t start with speed dating.

The Bake Off: There’s Bad News, and There’s Bad News

In our experience, the bake off means one of two things.

First, the prospective client probably doesn’t know what he’s looking for. That’s normal. Many clients have spent a lifetime building a business but have never sold one. For clients seeking education, we are here, but it’s a long process that starts with real talks, not just about business valuations and market conditions, but about life choices, goals, ambitions, plans for the next chapter. Conversely, the bake off often skews the criteria and means the slickest, or last, fast-talking pitchman wins the engagement. Never mind if the client understands what he just signed up for.

Second, the prospective client is bargain hunting, looking for the lowest cost “package” of services. That’s not us either. We never are the lowest cost provider. But there’s a difference between cost and value. Value is what you’re after, cost is too often the #1 criteria. We pride ourselves on dealing with the curves you can’t price into a relationship in advance, taking the time to listen and advise, serve as a sounding board, and just be there when the unexpected happens. Value over cost. Think about how hard you’ve worked, this critical step is worth everything.

We view our relationship with our clients as a partnership. We take pride in helping them win – and win big. We look at the entire picture. We bring together all the systems, processes, tools, and technology to build a cohesive team that will produce a successful outcome. No investment banker can share all this during a two-hour meeting in a hotel conference room.

Discovery, It’s a Process

We start with a discovery meeting. Actually – depending on how that goes – we have more discovery meetings. This is us listening and understanding.

One of the most important things we want to know is: “What are your goals and objectives?” We want to work with people who are looking forward to their next chapter, excited for what’s next and are going to enjoy the fruits of their labor in that next chapter. We want our clients to be happy when this is done, not regretful.

Sometimes it’s not the right time to sell. Conditions aren’t right. The potential proceeds would fall short of future needs. We’ll tell you that, and we’ll stick by you, help you move toward those benchmarks, and when the time is right, we pick back up. An off-the-rack firm with the only goal of getting a deal – any deal – is working for the closing commission, not you.

It Is Only the Largest Financial Transaction of Your Life…

In an article for Entrepreneur magazine, guest writer and CEO of ShippingEasy Katie May offered an insightful headline and interesting points. The headline, “The Art of Selecting an Investment Banker” wisely suggests choosing an investment banker isn’t like shopping at Walmart, looking for the lowest price. It’s the art of building a personal relationship with someone you will lean on in more ways than one.

May writes, “What I have learned from several successful business exits is that first and foremost, this is a partnership between the business owner and investment banker, not a service provider relationship. Like any good partnership, it is built on trust, with each partner bringing value to the relationship. Each must have an equal commitment to the outcome — preferably an obsessive level.”

And she reminds us this is a long process. Prepare to spend hours in conference rooms with your investment banking team – that means weekends, after work, hearing critiques on your “management meeting” presentations, making your business attractive to buyers. You want to work with a person, a team, you genuinely like.

We’d Rather Listen to You Than Sell You Something

All this is why we don’t participate in a frenzied pitch for clients. To business owners who read one day about a competitor selling, it may seem a deal magically appeared. The reality is the transfer of a business is a lengthy, demanding endeavor. It’s no time to turn over the wheel to a low bidder hell-bent on getting a deal done. This process is full of moving pieces, before, during, and after the sale. We encourage our clients to think about every aspect of the transaction, from maximizing value by producing clean financial records that demonstrate consistent, repeatable growth, to preparing for the potential tax implications and wealth management needs after the sale.

And then there’s you. What’s next? We help you put it all together. Do you want an investment banker who wants to help you achieve a sale, or do you want a team that wants to help you achieve your goals?