When selling a business, putting aside personal feelings is a difficult task but ultimately leads to a more successful sales process.
As a business owner and entrepreneur, your business is your baby. You have invested a significant portion of your life, through blood, sweat and tears, into your company and have developed a personal connection with staff and clients. This has meant that the business you own has become an important part of your and your family’s daily life.
Entrepreneurs experience a wide range of emotions during the process of selling their businesses including relief, elation, anger, frustration, and a sense of loss. The sale process is typically quite a lengthy one with many emotional ups and downs that are important to be aware of, and to expect. If these emotions are not recognised or are left unchecked, they could have a real dollar impact on the outcome of your business sale.
Before going into a sale process, you should have a clear understanding and acceptance of why you want to sell and what you would like to do once the sale has happened. Understanding your reasons for selling is very important for a prospective acquirer in terms of gaining trust in the process. Are you looking to make a quick buck and start up again soon? Are you heading to retirement? Or are you just tired of running your business and all the stresses that come with it?
At this stage it is also key to give some thought to the role you may be willing to play during the transition of your business to the new owner. Many buyers would want the previous owner to remain permanently, or for a specific period, to help with the transition. Make sure that you’re emotionally prepared to play this role in a professional manner. It is important to recognise that key decisions will no longer be your own and that you may not agree with all the changes the new owner will make.
During the sale process, it’s critical to remain focused on operating your business. From experience, it is evident in the body language or conduct of a seller that they have emotionally sold their business even before negotiations have commenced. If a potential buyer feels this is the case, they are in a stronger negotiating position than you and there is the potential that your business suffers in the process. It is important to remember that a deal is not done until you have signed on the dotted line and the cash is in the bank.
Once the sale is complete, the day will come when you need to hand over your ‘baby’. You may think your worries are over now you have cash in the bank but it’s very likely that that will not be the case. The weight of a healthy bank balance only lasts so long; you may soon wake up in the morning thinking about what comes next or worrying about your customers or staff members.
Selling your business is unquestionably an emotional process and these emotions need to be planned for. Business owners are frequently flooded with emotions after they have finalised the sale and transitioned out of the business. Given time to reflect, sellers can feel a sense of loss, especially if they developed close friendships with their employees.
Think about who you wish to engage during this process, bearing in mind that patience and communication are critical to a successful deal. Whilst thinking about and planning for your next phase in life – the exit strategy from your business – consulting an advisor, such as Catand Advisory, is a logical step in enabling yourself to be more emotionally prepared for the transition when it occurs. Your family members should also be involved in this process since the business has likely been a major part of their lives, too.
Sellers who lack a solid plan for the next stage of life find it difficult to let go of their businesses and are more likely to allow personal emotions to taint the process, either during or after the deal has happened. Keeping your emotions in check will ensure that the sale of your business is as positive an experience as possible.
Andrew Usher, Director, Catand Advisory