By Richard Wright - Prepare to Sell Ltd
There are 3 occasions when owner-managers of businesses consider selling:
- When circumstances change unexpectedly such as ill health or bereavement;
- When they realise they have taken the business as far as they probably can;
- When it’s getting near to retirement.
In all 3 cases the danger is that a sale process is initiated before sufficient groundwork is done to enable maximum sale value to be achieved.
As an owner-manager you are probably the key asset. You have the experience and expertise; the business dances to your tune. So if the value of your business is what’s left after you’ve gone, where does that leave you?
Getting that experience and expertise spread evenly amongst those who will remain in the business and allowing a business to dance to its own tune is hard. It’s a cultural change. It takes time. And while you are too busy running the business how is it going to happen?
Giving employees and managers permission to take ownership of the decision-making process and take responsibility for the outcomes is hard for both you and them to come to terms with. But it is essential to liberate the value in your business.
You may need new key people to start to fill the skills gap. That might be a cultural change too, if they are any good.
So the race is on to build that value into the business to remain after your exit.
It is not a quick fix. Cultural changes never are.
Yet far too many business sale brokers will push to get your company sold quickly, only allowing time for a quick tidy up of the figures: window dressing.
What is less well understood by the owner-managers is that the sale value you hope to get, or agree on, is often not the sale value you get to keep if what is behind the window dressing does not match expectations. ‘Due diligence’ and ‘warranties’ become the battle ground, not the initial deal price agreed in ‘Heads of Terms’ if you are not careful.
Re-engineering your business to build sustained value through and beyond the sale process requires time and a lot of skill. If your workforce have not seen that before they will be suspicious of your motives. That’s not a good thing whilst you are also trying to market the business! But introducing organisational changes for the benefit of everyone and for the long term success of the business is a perfect mask for the business sale process.
Prepare To Sell Limited (www.preparetosell.co.uk) is an advisory service set up to help owner-managers of smaller/medium sized companies re-engineer their businesses in preparation for a sale. We can help you appoint the right sale brokers, solicitors and accountants if required to help maximise the value of your sale, whatever the circumstances.