Entrepreneurs Hub regularly gives advice for selling a business to those who are getting ready to retire. There are numerous exits options at this stage in their lives and careers but passing the business onto a family successor is not always one of them.
Some people do not have any children to pass the company down to, whilst others do but their children are simply not keen to take on the family business. Other may lack the skills, time, interest or passion – or maybe the business isn’t based near to where they live.
If you’re selling a business and you don’t have a successor, what should you do?
Don’t take it personally
You’ve put so much into your business, so if you have kids it’s only natural that you’d want your own flesh and blood to continue to build on – and be rewarded for – all the hard work you’ve invested. However, try not to be offended if your children decide they just don’t want to take on the mantle. Feeling angry and hurt could cloud your decision-making abilities at a time when clarity is paramount. Stay neutral.
Malcolm Murray, Director of Entrepreneur’s Hub, empathises:
“I brought my son in to one of the businesses I was a shareholder in, assuming that was what he wanted to do. Three months later he said, “Dad this is not me I want to do something else,” so I sent him off with my blessing. He followed his passion and now has a great job in Sports Management.”
Evaluate your options early on
Even if your retirement is a few years away, don’t wait until it’s nearly time to step back from the business before you consider your choices for exit. Forward planning is the key to success at every stage in the life of a business and the sale is no exception. At an early stage, take time to ‘zoom in’ on your business sale objectives – for today and tomorrow.
Marketing and selling your business to the right buyer is, for most, the best option financially. You might also want to consider a Management Buyout (MBO), a form of acquisition where a company’s existing managers acquire a large part or all of the company from either the parent company or from the private owners.
Alternatively, some businesses are sold via a Buy-In Management Buyout (BIMBO); a form of a leveraged buyout that occurs when existing management — along with outside managers — decides to buy out a company. The existing management represents the buyout portion while the outside managers represent the buy-in portion.
Another good reason to start planning for exit early on? If your business is heavily dependent on you and your knowledge and relationships, the new owner may want you to be around for a while to help them throughout the transition period. Many business owners feel they owe this to their staff too – who will reward such consideration with continuity of effort.
Always seek expert guidance
Our top piece of advice for selling a business? Don’t do it solo! Meet with a corporate finance adviser like Entrepreneurs Hub who’ll have the skills and experience to help you navigate the sometimes rocky terrain of selling a business.
From assessing how ‘exit-ready’ your business is (and how to get it there), preparing documents and plans necessary to sell your business efficiently, marketing your business for sale, finding the right buyer and negotiating the final deal – we’ve done it all before so we can help you avoid the common pitfalls and retire with the financial rewards, peace of mind and satisfaction of a successful sale.
Contact us in confidence and arrange a no-obligation free consultation, where we can offer you advice for selling a business and help you achieve maximum value. Call 0845 067 8678 or email [email protected]