A few months ago, we posted a blog that posed “Three important questions you must be able to answer before deciding to sell your business”. There are, of course, many questions that entrepreneurs need to get to grips with before they make one of the biggest decisions of their lives. Here are three more questions, and some useful guidance in how you can find the answer.
When should I sell my business?
There are a couple of ways to interpret this. Firstly, when in the lifecycle of my business should I sell it? Secondly, does the time of year or world events have an impact on the timing of a sale?
In terms of lifecycle, it won’t surprise you to know that value is positively impacted by growth. So, a company that is growing will be in better shape than a company that is in decline. That’s not to say a company that is static or declining isn’t saleable, but you might want to consider if there is anything you can do to boost sales or highlight potential growth before you sell.
Recent events have almost certainly raised some questions around whether it is right to sell now or wait for things to settle down. In our experience though this concern is largely unfounded. A good business will sell, regardless of what else is going on. The only exception is if world events have a direct negative impact on your business, but even then, this does not mean your business isn’t saleable particularly if the effects are temporary.
Selling your business is a process, not a one-shot deal. Acquirer profiles and seasons will change, and a good sales process will adapt to accommodate this. So, the question of when to sell really does come down to when you, as the owner, are ready to take that step.
Who should I tell that I am thinking of selling my business?
Most business owners are nervous about this question. On the one hand, it seems inadvisable to tell anyone, but on the other, this is a big decision, and you need to talk to some people you trust.
We looked at this question in more detail in our blog on confidentiality; when to release information and who to is a big part of the planning we do with our clients. But what about before you decide to sell? You know best who you can trust and who you need to talk to, but here are some thoughts from us.
- The further removed from the business the better. I am sure you have very trustworthy people working for and with you on the business, but the closer they are to the business the more impact your decision to sell will have on them. They may not go spreading your secrets, but they may well be unable to avoid bringing their own agenda into the discussion.
- Advice from your peers is preferable. If it’s advice you are looking for, you ideally want to talk to someone who understands the position you are in. That would be other people who own, or have owned, a business. As well intentioned as they may be, it is rare that someone who hasn’t been in your shoes will give you the best advice.
- Talk to the experts. Entrepreneurs Hub are always delighted to speak to business owners on a confidential and no-obligation basis about their options. We make no charge for an initial consultation and it’s a great way to help you think through some of the issues.
What do I want to happen to the business, staff and clients after I sell?
This will be a more important factor for some business owners than for others, and a lot of it depends on the nature of your business. But for most of you there will be, to some degree, a concern over what happens next for the people who have helped you get the business to where it is today. In fact, it may be one of your strong reasons to sell, recognising their future is better with the fresh investment and energy of a new owner in the driving seat.
The reason it is worth thinking about before you decide to sell is that it may have some bearing on how you approach the sale, whether or not you include competitors in the approach, and how long you stay involved post-sale, if at all.
If you are thinking about selling and would like our help in answering any of these questions, please get in touch and we will arrange a free, no-obligation virtual business review.