No matter the reason, from retirement to a change in lifestyle, selling a business is a huge and life-altering decision. Therefore, it’s no surprise that when looking to sell a business, business owners have assumptions and fears about the sales process
John Hatt, managing director and experienced business broker at Business Partnership knows what makes a successful business sale. John also has the unique experience of selling his own businesses before going on to invest in a Business Partnership franchise. Below John shares some of the worries associated with selling and the common fears that put barriers in the way of a successful sale.
The top common fears:
• What comes next?
• Not achieving the right market value
• When will I get paid?
• What happens to my legacy and/or employees?
“In my experience, the top fear for sellers is what comes next. I have had clients pull out the day before a sale is meant to go through because their business partner is ready for retirement and pushing for a sale, but they have no idea what their next step is,” John explained.
“There are then consequences that come from pulling out of a sale at the eleventh hour, such as financial costs that must be paid out to solicitors and accountants as well as cancellation fees. If someone has a clear plan of what they will do once they have sold their business, that generally makes the process easier. You must be totally prepared to sell your business before making the commitment.
“For a lot of people, retirement can be quite daunting. People who have hobbies or set goals for the next stage of their life are generally more involved with the sales process - it’s those who don’t who often end up having seller’s remorse later down the line.”
“Confidentiality is also a common fear for sellers as they don’t want their customers, suppliers or staff to find out about a sale before the deal has been agreed. A sale is often a positive decision, but people jump to conclusions and adopt a worst-case view and assume there’s something negative going on. Depending on the nature of the business, some people are also conscious not to upset the supply chain, by selling to a competitor, or to create uncertainty amongst employees.”
“Knowing when you get paid is another key concern for many sellers. They want their payment upfront and to know how much they will get paid when they hand the keys over to the new owner. There are some sellers who are also worried that the deferred payments don’t appear (there are plenty of horror stories out there) – especially when they are relying on it for their retirement, and it is vital to the life they have worked so hard to achieve. In this instance, my advice would be to prepare your business properly for sale, remove the risks and then go and find buyers who can afford your business – by doing this you will create a competitive market and reduce the need for any deferred consideration.”
“Many business owners are also concerned about what will happen to their legacy and employees once they sell, especially if some staff have been with the business for many years – there can be strong emotional bonds with their colleagues and the business. Some sellers are willing to accept a lower price to ensure their workforce is safe and their brand name continues long beyond the sale.”
Sellers will have many concerns, from not achieving the right market value for a business they have worked hard to build, to confidentiality within the sales process itself. This is where having a good business broker on board for the entirety of the sales process will reassure sellers and help them manage the process to alleviate their fears.
After working with brokers in various capacities throughout his career, John was left unimpressed. As soon as he discovered Business Partnership, he sensed their values were a cut above the rest and decided he was well-placed to help other business owners who had been left feeling as detached from the business sale process as he had been.
“The recession in the 90s took the shine off business for me,” he says. “What changed that was a Business Partnership advert - they seemed to be doing things right - much more knowledgeable than the brokers I had dealt with when selling my own businesses.
“I, therefore, made the decision to invest in a Business Partnership franchise. The training programme was fantastic and I have been a business broker for two decades with the benefit of a great framework behind me. Becoming a Business Partnership franchisee first and then evolving the business as managing director is one of the best things I’ve ever done. It’s constantly changing and evolving. A skilled broker will help with all of the issues discussed – from preparing a seller and the business for sale to developing the right marketing strategy, protecting confidentiality, finding the best buyer and agreeing on a deal structure that protects both seller and buyer.”
Ultimately, when looking to sell a business, knowing your business value, and having the right guidance throughout the entire process is key. After all, it can be the biggest single sale transaction an owner makes.
John Hatt is managing director of Business Partnership, a unique national franchise network of 21 regional offices connecting business sellers with business buyers. With over 20 years of experience helping businesses sell quickly at maximum value, John understands the practical and personal issues involved in selling a business and Business Partnership provides a personal, professional, and confidential service to buyers and sellers alike.