In the past four years, John Hopper sold his company twice. At the St. Louis Smart Business Dealmakers Conference, he talked about assessing the timing to sell and his thought process leading up to the events.
The CEO of Gateway Dealer Network says key to selling is, first and foremost, run the business well every day so that it's ready to sell when that time comes.
"I don't think timing the market is particularly effective," Hopper says. "It's really going to time you — at least it did for us based on what was happening in the organization and around us."
Something he says he believes operators can be guilty of is that they get busy running the business every day, and there's a long list of things they'd like to do, but it doesn't necessarily impact what has to get done, so it doesn't.
"In our case, some of those documentation (issues). We ran the business really well, but we didn't necessarily have those processes documented," he says. "And when you go into the sale process, that makes life a lot easier. It's one thing to be able to sit there and explain, 'This is what we do.' But there's a lot of comfort in having some of those processes documented."
When approaching seller diligence, it's important to have in mind the desired outcome of a sale and what that looks like. Ask questions such as, Where do you want to take the company? Where have you been taking it? And does that align with the people that you're talking to?
"In our case, we talked to lots of different potential buyers, and some aligned better than others," he says. "I think in the end, we ended up about as good as you could get. But I think that's the first thing is where do you want to go and then really do your diligence to make sure that that aligns with that new partner and where they want to help you get there."
Cultural alignment was another element he wanted to be sure was found in the ultimate buyer. And the test of whether the right choice was made is in the post-deal transition.
"That alignment really comes through, and it's helped a lot with the employees in the organization to get through that transition," he says. "So, I think that part is really key."
The process of selling is like having a second job — while the sale is being dealt with, the company has to go on every day. To ease some of
"All the same challenges I faced yesterday, if you will, are still there — people are having problems, customers are having issues, you're working with your suppliers, whatever it is," Hopper says. "And so, all that stuff has to be resolved not only at my level, probably more importantly at everybody who's out there running the organization. There's no way to get around the second job thing — like lots of coffee and late nights is just what you're going to do through the process."
What he learned the first time and benefited from the second time, he says, was a strong team.
"Definitely there's a couple of people in the organization — and broader than that, about five — that put in a lot of time in" he says. "That's really helpful, because you're not going to be able to do all this yourself. Fill those holes before you get there so that you can lean on them to get a lot of this done because it's a lot of work. You're going to put in a lot of time. It's not just the sell side; you're managing the transition, the expectations, the communication, people's expectations, the employees, you're dealing with all these new buyers. You got to prepare for all that. There's just a mountain of information that has to go back and forth and questions that have to be answered — it just doesn't end. It's a long process. It was a long year for us."
