The most common question I get asked, apart from now much is my business worth, is when is the right time to sell my business? The simple answer to this is – ‘when you don’t need to’. When selling your business, choice is absolutely key to ensuring you don’t experience any post deal regrets or fall victim to sellers remorse which sadly many business owners do. Apart from financial wealth, I would encourage every business owner considering an exit to consider what are the other elements of selling your business that are important to you? For many it’s these socio-emotional elements that will truly reflect wealth.
What is most important to you post your exit?
Continuation of your legacy?
The answers to these amongst others will all contribute to ensuring your ‘socio-emotional wealth’ is as healthy as your bank balance post the right transaction, thus aiding in avoiding the all too often experienced seller’s remorse.
Make sure you look after yourself too – what are you going to do in the future?
What will be your purpose if not the owner of ‘xyz Ltd’. It’s ok not to know the answer to this, however I would encourage you to give the answer some considered thought – the sense of loss for some business owners upon selling their business can be comparable to that of losing a loved one and the associated grief. Returning to my first point of selling your business when you don’t need to, don’t wait for a competitor to approach you to make an offer to buy your business, I can guarantee that they won’t fulfil your requirements with the various elements of wealth which will leave you feeling accomplished. The best buyers will be complimentary in nature and will add value to your current business, and vice versa. This ‘synergistic fit’ carries value and should be reflected in the transaction. Another downside to responding to an approach is the lack of time you’ll have to prepare your business.
Preparation. preparation. Preparation.
Make sure your business will stand up to the scrutiny that Due Diligence will provide. Poorly drafted, or even lack of contracts for example, are likely to open up the opportunity for the buyer to use DD as a price chipping exercise. DD is about proving facts, not re-negotiating the deal.
Plan for the future; Presenting future opportunities to any buyer will demonstrate greater value in the business, a business with growth opportunities will be more attractive to any buyer than a business with little growth achievable. Be pro-active about exploring the market to find the best buyer for the business. Remember if you wait to be approached, you’re likely to be unprepared, have no other options and certainly won’t be able to compare their offer with any other possibilities a wider market approach would offer.
My advice to anyone looking to sell their business without any regret, is to ensure you are in control of the entire process, prepare, research, be pro-active and concentrate on the future potential of the business. If you do this, you will be less likely to feel bereft post any transaction, and your ‘socio-emotional wealth’ will be abounded.
Vickie Elson-Hood, Spring Top Group springtopgroup.com