Whenafamilybusinesssells,thehardestnegotiationisn'twiththebuyer–byMatsebeThulare,PrivateEquityTransactoratRMBCorvest

 

Ask anyone trying to sell a mid-sized business right now how long they expect the process to take, and add several months to whatever number they give you. A deal that would have taken four to six months to close a few years ago now regularly runs to nine or twelve, sometimes longer once multiple shareholders, a carve-out, or regulatory sign-off are involved. That shift has become the norm rather than the exception, and it changes how sellers should think about a process before they launch one.

Part of it is competitive tension. A process that once had three or four credible bidders now often has one or two. Debt is more expensive than it was two or three years ago, and harder to get on the terms buyers had modelled, so financing and approvals take longer, and occasionally fall over close to the finish line. Buyers are also doing more diligence, not less. More rounds of questions, more site visits, more scrutiny on quality of earnings, often a request for updated management accounts every month, because in a lower-growth environment nobody wants to be wrong about the forecast. Any softening in the numbers slows things down further, and so do regulatory and competition approvals.

None of that is unique to how we invest. What is different for us is that we don't carry a fund's clock. A traditional fund has an eight or ten-year life, with investors expecting distributions inside it, and when conditions aren't right for a sale, the manager doesn't always have the option of waiting. Sometimes a sale gets forced alongside management because the fund's calendar says it's time, not the business. RMB Corvest invests off our own balance sheet, so that pressure doesn't exist for us. We can wait for the right buyer and the right price, not the right year on someone else's fund.

That changes real decisions. If we expected to exit within twelve months, we might hold back on a capex cycle or a new market entry. Knowing we can hold for another 18 to 24 months instead, means some of that becomes worth doing, because we get to see the return on it before we sell. It also shapes how we structure a business for the long term - property is a much longer-dated asset than a typical private equity hold, so we generally prefer to keep it outside the main operating business and rent, rather than tie ourselves to a hold period the property itself would extend. Fidelity Security is the clearest example of what that patience looks like taken to its logical end. We've been invested there for around 35 years, through several transformations of the business, against an average industry hold period closer to ten. Servest, Kwikot and JoJo Tanks are more recent examples of the same instinct.

None of this is one-sided, though. We don't get a fixed-life fund's forcing function with management, so that patience cuts both ways, and it can make for a lazier balance sheet if we're not careful. Knowing that about our own model is as useful as the patience itself.

For sellers and management teams weighing up a sale now, a few things are worth building in early rather than discovering three rounds into a disappointing process. Succession matters more than people expect. A management team young enough to reinvest alongside the next buyer removes a genuinely sensitive obstacle before it becomes one. Advisers can be optimistic about achievable value to win the mandate, so hold them to it, and price in a thinner pool of bidders from the outset rather than after the offers disappoint. Get your data room and quality-of-earnings story into excellent shape before you launch, because a scrappy dataset costs months now in a way it might once have been forgiven. Think about who inside the business needs to know it's for sale, since a long, visible process creates real retention risk among the people you most need to keep. And have a plan B: a process that doesn't complete on the first attempt isn't necessarily broken, but you need to have thought about what you'll do if it takes twice as long as planned.

On price and structure, the honest advice is to accept that the multiples buyers were paying a cycle ago have compressed for anything short of the strongest assets, and chasing that number just extends your own timeline. Expect, and consider offering, more deferred consideration or earn-outs to bridge a valuation gap, and think about whether a full exit is even the right goal. A minority sale or partial recapitalisation, keeping a residual stake, is often the more realistic route to capital today, and lets you share in the upside once conditions turn.

None of that changes what makes a business worth buying. It just means a longer, more disciplined process is now the starting assumption, and the businesses that plan for it upfront tend to come out the other side in better shape.