Selling a business – 4 more myths
In meeting and talking with business owners, we often come up against certain preconceptions about the process of selling a business. We wrote about some in a recent article you can find here, but it turns out there are enough for a second article!
It's important for us to make sure that any successful business owners out there looking to sell are aware of these preconceptions, and aren't being misled about the reality of the business sale process, or any post-sale situations.
So, go ahead and take a look at four more selling business myths below. Enjoy!
1) It does not matter if people know I want to sell my business.
Whilst if you are of retirement age the idea of selling your business wouldn't be a surprise to the people around you, we'd recommend keeping any notion of selling your business to yourself until you've come up with a robust plan for sale.
Uncertainty about the future of your business may raise anxiety amongst your staff, and concerns with both your supply and client base. And any chance the key stakeholders in your business finding out about the sale “through the grapevine” must certainly be avoided.
Confidentiality is of utmost importance and keeping control of the communication about the sale is paramount.
Of course, you will need to inform your staff, suppliers and clients once you have concluded a sale or just before completion - once you are able to present the transfer of ownership as a positive opportunity to all concerned.
2) I don't have to give a reason for selling my business.
“Why are you selling?” is one of the first questions any prospective buyer will ask, and not having a clear reason will have a detrimental impact on the whole selling process.
It is hard for potential buyers to understand why any business owner would want to sell a healthy and profitable business, so having your reasons prepared can help you provide much needed clarity. Building trust and confidence with buyers is key to the successful sale of a business, and any potential buyers will want to know that there isn't something secretly wrong with the business that is forcing you to sell.
When it comes to the reasons why a business owner would want to sell, there are a number of fairly common ones that we find most people have. You can find out what they are by reading our article on why business owners sell their businesses.
Really understanding the reasons that you want to sell your business is key to finding the right buyer, business valuation, and best deal structure for you, so it is important to be honest with both yourself as well as any prospective buyers.
3) I have to leave the company after the sale.
This is certainly not the case with many business sales. And, in fact, if often comes back to your reasons for selling the business and the deal structure agreed.
Although some company owners want a complete exit from the business, in many cases it is beneficial for both buyer and seller if the business owner wishes to stay on and continue to play a vital role in running the business. No-one knows the business better than the person who has successfully run it, right?
One reason for a business sale resulting in the owner staying involved is if the owners and business have reached a crossroads where more investment and management expertise is required to take the business forward.
In this case, a deal structure where the owner remains involved in the business provides confidence to the buyer in the continuity of the business going forward and a potential second bite of the cherry for the seller on the eventual final exit.
So, simply put, if you want to stay a part of your business after you've sold it, that's a very real possibility.
4) They don't know how to run a business.
Many business owners assume that if they sell their company to financial investors that, while the buyer may have the money, they will not understand how the business works.
However, what is often the case is that the right private equity group can offer you and your business much more than just money. Many of them have industry contacts and current employees who can immediately add value to the business.
They will likely also have a portfolio of companies they already own which they can leverage to the benefit of your company via strategic or commercial partnerships, or by opening your business up to new markets.
Finally, they can also provide strategic guidance and bring a new level of sophistication to your finances, marketing and operations. This is what these groups do every day, so there is a very real chance your business will further improve on the back of a successful sale, rather than regress.
We are business brokers with years of experience. There's likely not been an issue during a business sale that we haven't seen and overcome, so we welcome any questions you might have. Feel free to ask them using the contact form below, or by calling us on +44 (0)20 8090 9380.