Should You Stay or Should You Go Now?
The decision that all business owners must make one day.
Have you ever considered selling your business? Maybe it’s something you’d like to do but you feel reluctant to admit it. Most business owners never really think about selling their baby until they wake up one morning and realise that there is no succession plan in place.
Because there’s a great deal of emotion attached to selling your business. Your business might feel like your ‘baby’, something you’ve nurtured from it’s very first steps right through every stage of development, through all the hiccups and the successes. And now you’re facing the prospect of waving your grown-up offspring off to Uni.
But, to continue this analogy for a moment, the next phase of your baby’s journey is also an exciting and liberating new step for both of you. It’s an opportunity for growth and the chance for you to gain back the freedom you once enjoyed, without the responsibility and worry. You’ve done the grind. Now it’s time to realise the rewards for all of that hard work.
So, you must learn to have an open mind. If the chance to break free comes along don’t let emotion get in the way and don’t dismiss the opportunity until you’ve explored it fully. Often an unsolicited or surprise approach could be the ideal solution for you and your company.
Logic or emotion?
Imagine you’re buying a new car… are you the kind of person who weighs up all the options, who looks up mpg figures and NCAP ratings and boot size? Or do you just pick the car you loved from the moment you saw it? Do you go for the car that feels right for you? Are you a logical buyer or an emotional one? If everyone bought a car on logic then we would all be driving Dacia Sanderos (the UK’s cheapest car 2019) but you see more Range Rovers on the road that you do Dacias.
The truth is, it’s never that simple. We’re all driven by emotions even if we like to think we’re logical.
In the early stages of the selling process, the focus will on figures and the other elements which will affect your company’s price such as customer base, brand and suppliers. Of course, price is important, but it shouldn’t be the only reason for your decision to sell.
There’s another major factor, which can often be ignored, and that’s the rapport between you and the potential buyer. People really do buy people and if both parties find synergy and share the same values it can make the decision much easier. If you want to be reassured that the legacy of your business will be protected, you need to feel that you’ve established trust. Equally, your buyer will be looking for transparency and honesty about the business now and its projections for the future.
You’ll be caught up in thinking about the difference this deal will make to your life, and how it will change things for you and your family. Your buyer will have their own agenda and they’ll get caught up in your emotions too. You’ll use logical things like business valuations, deal analysis and financial forecasts to decide whether you want to sell, but at the end of the day you’ll make an emotional decision.
It’s vital to build rapport with the buyer and get on their wavelength so that you can understand what both of you really want to get out of the deal. Should you stay or should you go?
One last thing to consider.
You’ve made the decision to sell but maybe you haven’t thought about a deferred payment or ‘glide path’ exit. This is when you receive part of the purchase price on completion and defer the rest, in a deal structure similar to an equity release on property. You may have already decided that you want the full amount to retire or pay off debts, but before you dismiss this approach it’s worth examining the benefits of a slow exit.
Because they’re mostly about emotion.
It’s going to feel like a significant wrench when you leave your company. You could alleviate the burden and responsibility but still have some involvement in the business, perhaps by doing a couple of days a month or by staying on as a consultant to the new owner.
You might also want to be assured that your buyer is protecting the legacy you’ve created, that they’re looking after employees and customers. Suddenly severing all ties with your company might be too much of a shock to the system! A slower exit gives you some breathing space the chance to adjust to your new hassle-free life.
At Fidelis, we are always pleased to hear from business owners who are looking to sell or exit their business. Wherever you are in the process, for a confidential, no obligation discussion please get in touch.
Contact details:
Telephone: 0161 410 7070
Email: theteam@thefidelisgroup.co.uk
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