In a sale process, you are always trying to put your best foot forward and accentuating the positive in your civil engineering firm. You have but one chance to sell your firm, so it is of the utmost importance to have your firm's capabilities and characteristics viewed strongly by the buyer community. Every business and every firm has weaknesses, but in some cases, these weaknesses may be a bit more than that. They may be big problems – huge problems – problems that you do not want to face and certainly would prefer for buyers to overlook.

If your firm has issues that go beyond mere deficiencies, you must face these head on in a sale process. Trying to hide your problems will do more harm than good. Building trust with the seller is the single most important thing you can do in a sale process. If the buyer believes that you are hiding something, they are either not likely to want to move forward with a deal or they will discount the price to give themselves a cushion should things be worse than what has been disclosed. With our industry being a people business, destroying trust typically means that you destroy a deal.

It is always better to be upfront about major issues rather than waiting to disclose them. When you have many potential buyers, discerning who is in or out can be very valuable so you can spend the proper effort on those who are interested. Some firms, regardless of whether they trust you or not, may not want to proceed with a sale based on the issues your firm faces – some bridges are simply too far. You can waste quite a bit of time and effort on a buyer who ultimately will not be interested if you do not give them the good, not so good, and the ugly early on in the process.

Trust works both ways in a transaction: The seller must trust the buyer and vice-versa. When your firm faces major issues, you are much more likely to have a successful close when you negotiate with a buyer who you know understands the issues that your firm faces and will stand by an offer they make. The toughest deals from my perspective are when firms move into due diligence with a party that will use the tough issues as a way to continually renegotiate the deal to their advantage. By documenting your firm's issues and working through them with a buyer, you can assess whether they understand the magnitude of the issues and their effect on your organization. If you do not believe a buyer has full appreciation of your issues, it increases the likelihood that they may try to retrade the deal at the eleventh hour.

In my years of practice, I would rank a deal retrade as one of the most stressful and least desirable outcomes. For some buyers, this practice is common place and is a way that they add value for themselves. These buyers tend to get a reputation, and advisors, such as myself, can warn our clients of their modus operandi. This becomes harder to discern when you have buyers who have not been very active and have not built up a reputation in the industry. For buyers who are not very active, it is necessary to interact often with them to pick up on verbal and non-verbal clues to how they will proceed later in a transaction.

By talking through tough issues, you can learn who will stick to their offer and who may try to change a deal at the last minute. One thing is certain; when it comes to deals, no one likes surprises. Being forthright from the outset gives you the highest probability of reaching a desirable outcome.

W Hobson Hogan, a principal at ZweigWhite, assists AEC firms with strategy formulation and ownership transfer issues, including buyer and seller representations. Contact him at hhogan@zweigwhite.com.