The five stages of grief when selling a business

The source of the five stages of grief

The Kübler-Ross model, commonly referred to as the “five stages of grief” was introduced by Elisabeth Kübler-Ross which was inspired by her work with terminally ill patients. Believe it or not, it also applies to business too and it doesn’t have to only be during the business sale but I found that it was heightened during this time and I certainly experienced these grief stages a number of times during my business sale as we went around six times. Let me share with you one of those times with you now after listing the 5 stages of grief. The five stages are:

  1. Denial
  2. Anger
  3. Bargaining
  4. Depression
  5. Acceptance

Looking back and recognising the five stages of grief

During our business sale cycle we received an offer for the business (subject to contract) from a corporate organisation which had its own internal business acquisition team complete with an acquisitions manager. In the offer letter, it stated the offer / consideration and key assumptions made – such as keeping myself and my business partner on beyond the sale. The price was fair and we went ahead and signed the exclusivity letter which had a completion date within 6 weeks. That meant that the due diligence process had to be wrapped up within 4 weeks. Everything was seemingly going fine, we provided access to our comprehensive data room, had a couple of all day meetings going over financials and forecasted on top of answering hundreds of due diligence questions.

We were busy wrapping up due diligence with three days to go to completion day and our business broker got a call. The Acquisitions Manager informed our business broker that their due diligence had highlighted some concerns they had with our sales forecast and as a result, they tabled a revised offer which was a substantial price chip of over20% of the cash part of the consideration.

When our business broker passed on the news, I was in immediate denial (stage 1) – due diligence had gone well and as I disagreed with how they worked out the price chip, anger (stage 2) started to build up, especially as they said they had no intention to price chip!!  My business partner and I wanted to negotiate aka bargain (stage 3) but our business broker said that there was no room for bargaining and sure enough, within a couple of hours of that phone call, the price cut ‘best and final offer’ letter was in our hands.

I’m sure our 5 stages overlapped with each other and anger with depression (stage 4) set in almost simultaneously because we had no time to let the news sink in and be processed – only a few hours because we wanted to keep the deal alive.  We had no choice but to accept (stage 5) the revised terms (because we were determined to sell the business this fifth time around!) and we had to convince ourselves that it was a good thing that we were still being considered for purchase.

Not a great situation to find yourself in. In hindsight, I’m sure that we would have forced ourselves time to digest the news and slowed down the process in order to consider it with clearer heads and minds if we had the time but hours after receiving a price chip (chunk!) we were then told that the whole deal was off and dead due to cultural differences which sent me spinning around the Kübler-Ross model yet again – within a 12 hour period, it was quite a knockout – however that’s another story!!

Three takeaways

Look the potential buyer in the eye at the start of the process and shake their hand in that there will be no price chips – ideally, get it in writing too if possible.

During the business sale process if you happen to receive negative news, try and acknowledge it and work through the five stages.

And lastly, there is always a choice even if you feel you are backed into a corner. You can always change your mind and there will always be another deal to be had.

Joanna Miller, Co-Founder of Business Wand, helps business owners navigate their way through the start to finish process of selling a business.  Her specialty is helping owners understand how to prepare and make the most of their business sale process to maximise their company’s value. To understand how you can sell your business quickly for the highest sales price, purchase her book, “How To Sell A Business: The #1 guide to maximising your company value and achieving a quick business sale