Newsletter, Volume 12 | July 2019
When business owners choose to exit their business, they often don’t realise that the deal isn’t done until it’s done. Even where heads of agreement have been signed and there has been the customary shaking of hands, there can be no stepping back until the final agreements have been signed and the money is in the bank.
Another key consideration in the sale of a business is the inherent risk that comes with owning a business. Some business owners don’t have any idea how many sureties they have signed or even how many people they employ, assuming risk for others at a time when they should perhaps be focusing on their own security.
Finally, a third consideration in whether to sell a business, should be the personal energy of the owner. Too many people think that once they have built their business up, they can let it coast along. However, businesses invariably don’t coast; they either grow or decline. And if the business owner doesn’t have the energy to get the business back onto a growth curve, perhaps it’s time to get away from being a manager to become an entrepreneur again. In such a case, the business owner can exit some of their business and start working on something new. They can take some of their wealth out and put it into something more secure while still being able to play the entrepreneurial game.
There is a perception that selling a business is similar to selling a property. Get someone to value it, take that value to market with the help of a consultant (an estate agent in the case of real estate) and typically get a deal that is very close to the desired value. After that, it’s just a case of waiting for the money to be deposited into your bank account within a few months.
However, the reality is that selling a business is nothing like selling real estate.
Firstly, when selling a business, the deal that you ultimately end up with seldom looks anything like the value determined in an “independent valuation” due to the fact that deals involve tailor-made structuring and terms.
What is more, it’s a rare case indeed in which all of the proceeds of the sale are delivered right after the conclusion of the deal.
Secondly, the typical value range between offers on a property deal are relatively small, perhaps between ten and fifteen per cent. In contrast, the difference between offers in a business sale can be as much as two to three hundred per cent!
Needless to say, in order to sell your business successfully, you need a tried and tested approach that is delivered by experts with the skills, experience and a proven methodology to ensure that you get the best deal possible.