Selling your Business
When considering selling your business there will be many questions and concerns going round your head. Who would buy my business? Do my financial results need to improve to attract a seller? When am I going to find the time to do this?
Who would buy my business?
A common issue is that owners simply don’t know who the potential buyers might be and where a potential acquisition may come from. In many cases, the best way to maximise value for your business is not to sell to a competitor but to sell to a complimentary buyer where the synergies offered by your business allow the buyer to extract considerable value both from its existing business and from your business. Remember that a business is worth what someone is prepared to pay for it. The more value a buyer can extract from your business, the more you can ask them to pay in the acquisition.
Don’t I need to improve financial results before trying to sell my business?
Poor financial performance is also an obstacle that many owners think they need to overcome before they start giving thought to an exit. This is flawed logic: owners do need to address financial performance, but it needs to be considered in conjunction with potential exit strategies.
I am too busy!
Quite simply, many businesses are too busy to focus on exit strategies. This is understandable as it is, of course, the priority of business owners to focus on the day-to-day success and running of their business. However, this can make it difficult to consider potential succession planning.
Do I really want to sell?
Often the biggest issue, however, for many owners is they simply don’t have any desire to sell at the present time. They might enjoy a comfortable lifestyle, enjoy the position they have within the business and the local community, and have concerns (often sub-consciously) about how that might be affected if they were no longer involved in the business. This can be a particular area of tension in family businesses where not all the owners might be involved in the business and the stakeholders will have competing interests. Regardless of the individual situation and how comfortable you are right now as a business owner, it is crucial that you plan ahead to consider the future and the legacy of your business.
Take some time to consider potential exit strategies – try to be conscious of potential buyers of the business.
- If you can identify an exit strategy (or strategies), allow this to inform the ongoing decisions taken in the business.
- Deal with any competing interests amongst the owners of the business to avoid letting them fester so that resentment grows and positions become more entrenched.
- Value is only one aspect of an exit. Focusing on the right exit strategy will drive value and make the business a more attractive acquisition target.
- Try to run your business with one eye on the exit door – consider what the potential buyers might be looking for when they take over the business.