Selling your business can be one of the most demanding undertakings of your business life. Our special exit planning feature provides a range of perspectives aimed at taking the stress out of this most testing of business challenges for the successful entrepreneur.
Selling your business can involve a lot of emotion and, sometimes, a lot of money. Be prepared suddenly to find the business that you've built and nurtured being crawled over by people picking holes in it. But whatever exit route you choose – trade buyer, private equity, MBO, VIMBO, BIMBO – it's as true today as it's ever been that the key to any successful transaction is understanding your potential buyer. The goal you must set yourself is to get inside the mind of the buyer and send out the right messages about your business.
Remember that any serious buyer in the current market will be looking for excuses not to buy. Make sure you understand who you're selling to and how to treat them. Potential buyers need to believe they are not your only option and therefore that what you're giving up is a good opportunity for them.
The high-powered executives in the large company you're likely to be selling to will find it hard to understand why little you justifies getting, say, £20m. They won't like it, so give them something to believe in. This could be along the lines of "I'm a small entrepreneur, I got lucky, this is too much for me, it's got too difficult". The last thing you should do is tell them how brilliant you are and how bad they are.
Provide a compelling explanation about why your business works and why others may not, so get to know your competitors. Set it all out in a concise executive summary, which your buyer will probably much rather use and pass around than write themselves. Be upfront about the things that keep you awake at night, and that way the buyer can buy with knowledge. Use your non-executive directors (if you have them) as your company's conscience and be able to answer their questions before they ask them.
Looking at things from the buyer's perspective will help you to stay in control of the sale process and maximise exit value. The moment you lose control you'll start destroying value. For example, stick to your deadlines and think carefully before chasing up a buyer. Does it make you look desperate? Your power lies in the buyer thinking they have competition.
On the following pages, Steve Gilroy of Vistage explains why you should start planning your exit now, and Colin Mills of the FD Centre shares his thoughts on how to ensure a successful outcome.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
