The best advice you can get when it comes to selling a business is from someone who has already done it. Other sellers will really understand what you are going through and be able to help you.
Professionals will also have been through the process multiple times and will have amassed useful tips. Therefore, it is worthwhile getting their opinion.
We have put together a selection of advice from people who have successfully sold their businesses as well as the professionals – tips that will hopefully help you when the time comes to sell your business.
Deciding when to sell
For Liz Edminston, owner of OwnersAway, the time to sell came because she was ready for a life that was less demanding than running her business was. She had been running a business for 11 years before she sold, and she knew she had made it a success and wanted to cash in on her hard work. Liz says, “it was an awful lot of work for one person.”
Maggie and Richard Hilton had a similar experience. They had built up an award winning manor house over the years and they wanted to retire after decades of work. Maggie says, “we are semi-retiring and we really have been looking for the right kind of people to take over because we created this from nothing, we really hoped that we would find people to carry on our legacy.”
No matter the reason, though, much of the advice from the sellers remains the same.
Finding a buyer for your business
There are a few different ways that you can go about finding a buyer for your business. You can sell the business yourself, or you can go through a business broker.
There are many online marketplaces where you can advertise your business. Both Maggie and Liz advertised their businesses online and received a few high-quality enquiries from which they were able to choose the buyer they thought was right for their business.
Try not to lose patience during the process, though. According to Philip de Lisle, former serial entrepreneur turned professional mentor, “Most deals take about nine months to complete with around 4,000 emails [being sent between the parties] and so many hours and hours of precious time [invested] that people lose the will to live and walk away.”
For some businesses, having a professional help get you through the process can be a great way to keep on track.
“The real skill of a broker,” says Rob Goddard, CEO of Evolution CBS, “is ensuring that you receive the best possible price for your business in a deal structure that meets your specific requirements. For example, ensuring that the price isn’t dependent on an ‘earn-out’, where a portion of the value is performance-related and paid over a longer period during which you have little or no control.”
Not everyone experiences complications and headaches with the sale of their businesses. For Alan Nash who sold his yacht brokering business, Boatshed.com, the sale was straightforward and completed in a relatively short period of time. “He [the buyer] liked what he saw, I got on with him very well and it was all done and dusted within a week,” says Alan.
Confidentiality during the sale
Depending on the needs of your business, different options will be necessary. Some people looking to sell their businesses are concerned about advertising their business and risking the confidentiality of the sale.
Gareth Smyth, co-founder of business brokers Hilton Smythe, says, “Whilst in some businesses there is a clear need to be confidential when selling – such as those that take deposits or have longer term contracts with customers – for others it just doesn't make sense.”
Advertising your business online will allow you to reach a far larger pool of buyers than a for sale sign outside your business, although, going through a broker will give you the opportunity to hand over the reins to someone with experience.
Philip De Lisle does point out that, “You need to plan who in the organisation needs to know. You don’t want staff looking around for new jobs ‘just in case’. Nor do you want your competitors whispering in the marketplace that you are up for sale.”
Closing the deal
The end goal is that you close the deal on terms that you are happy with. These terms will be the price, of course, but it may also be that you find the right person to take over your legacy and what you have built.
For Liz, it was important that she find someone who was aware of the amount of work that the business would involve. She didn’t want to close the deal until she was sure of this.
“So, … the business was priced well, … [and was] in a reasonable price range and [it] had a good turnover [but] I just wanted them to be clear that there’s a lot of work going into that turn over and it doesn’t matter whether you’re in Spain … or whether you’re in the UK … you've still got to work hard for your money.”
The money that you get will also be an important. Philip De Lisle suggests that, in order to avoid the deal breaking down because the buyer offers too little money, “Before you enter negotiations make sure that you have a “red line’ figure that is your absolute bottom acceptance price, and make sure that you tell your negotiating team or business broker what it is.”