If you receive an approach to sell your business, it can be an exciting and potentially life-changing opportunity. However, it's essential to approach the situation with careful consideration and a strategic mindset. Here's a comprehensive guide on what to do if you find yourself in such a situation.
Evaluate your objectives and motivations
Reflect on your initial vision: Recall the reasons why you started the business in the first place. Assess whether you have achieved your initial goals or if there are still milestones you want to reach. Understanding your original vision will help you determine if selling aligns with your aspirations.
Define your current objectives: Identify your current objectives and what you hope to achieve in the future. This could include financial goals, personal fulfillment, new challenges, or lifestyle changes. Clarify what matters most to you and prioritize your objectives accordingly.
Consider the timing: Assess whether the timing is right for a sale. Evaluate the market conditions, industry trends, and potential future prospects for your business. Determine if there are any factors that may positively or negatively impact its value in the near future.
Assess your personal readiness: Selling a business can be an emotional process. Consider your personal readiness for such a significant change. Assess if you are prepared to let go of the business you built, transition to a new phase of life, and potentially face a different set of challenges.
Analyze the potential benefits: Evaluate the potential benefits of selling your business. This could include financial gains, reducing personal risk, freeing up time and resources for new ventures or personal pursuits, or accessing new opportunities through the buyer's network or resources. Determine if the potential benefits outweigh the satisfaction of continuing to run the business.
Assess the risks and challenges: Evaluate the risks and challenges associated with selling your business. Consider potential disruptions to employees, customers, and suppliers, as well as any potential negative impact on your industry reputation or personal legacy. Assess if the potential risks can be mitigated or if they outweigh the benefits.
Seek input from trusted advisors: Consult with trusted advisors, such as accountants, lawyers, mentors, or industry experts. Share your objectives, motivations, and concerns with them. Their external perspective and experience can provide valuable insights and help you make a more informed decision.
Consider alternative options: Explore alternative options that may allow you to achieve your objectives without selling the entire business. This could include selling a portion of the business, entering into strategic partnerships, seeking investors, or considering succession planning. Assess if these alternatives align better with your objectives.
Trust your intuition: Ultimately, trust your intuition and gut feeling. Consider your instincts and how the decision to sell aligns with your values, aspirations, and long-term happiness. Take the time to reflect and make a decision that feels right for you.
By carefully evaluating your objectives and motivations, you can gain clarity on whether selling your business is the right path to pursue. Remember, it's a highly personal decision, and there is no one-size-fits-all approach.
Assess the offer: Carefully review the terms of the offer.
Determine the financial aspects: Evaluate the financial aspects of the offer. Assess the total value being offered, including any cash upfront, potential future payments, or equity in the acquiring company. Consider the fairness of the valuation based on your business's financial performance, growth prospects, and industry benchmarks. If necessary, engage a professional business valuation expert to help assess the offer's financial merits.
Assess the buyer's credibility and compatibility: Evaluate the potential buyer's credibility and compatibility with your business. Research their reputation, track record, and financial capabilities. Consider their industry expertise and strategic fit with your business. Assess whether the buyer can provide the necessary resources, skills, and network to drive the business forward and ensure its long-term success.
Consider the impact on stakeholders: Assess how the sale will impact your stakeholders, including employees, customers, suppliers, and partners. Consider the potential consequences on their relationships and the continuity of the business. Evaluate whether the buyer's plans align with the values and culture of your organization to ensure a smooth transition.
Evaluate the post-sale involvement: Determine the buyer's expectations regarding your involvement post-sale. Assess whether they expect you to stay on board for a transition period or if they require your ongoing commitment. Evaluate whether these expectations align with your own desires and plans for the future.
Perhaps having been approached, the idea of a sale seems like a path you want to go down or explore, but the offer doesn’t quite match what your expectations are. This is often the case and may mean that whilst the offer that has been made is not the right one right now, it may be worth exploring other potential suitors and we at Dexterity Partners can Help you do that and navigate that market.
Seek professional advice
Engaging experienced professionals like accountants, lawyers, and business brokers is crucial during the selling process. They can help you navigate legal and financial complexities, provide valuable guidance, and protect your interests. Ensure you select professionals with expertise in mergers and acquisitions (M&A) to maximize your chances of a successful sale. However most importantly is to engage advisors who you trust and you have confidence that they will do the best possible job for you and are aligned with your interests. If any sale process happens, then they will be your guide through the process in ensuring you achieve the outcome you desire and as such getting the right advisors is crucial.
This is what we at Dexterity Partners pride ourselves on, honest, straightforward, expert advice from people who have not only advised on hundreds of deals, but also been on the other side, buying and selling their own business and have the experience of sitting in your shoes. This allows us to have a unique approach and perspective which means we can understand exactly the situation you are in and how to achieve your goals and objectives.
Confidentiality and non-disclosure: As always, maintain strict confidentiality throughout the process. Implement non-disclosure agreements (NDAs) with potential buyers to protect sensitive business information and trade secrets. This ensures that if the deal falls through, your business remains unaffected.
Fit to Sell
Finally, Prepare your business for sale: Getting your business Fit to Sell is key to getting the deal you want and your business deserves. The number one reason owners get less than they want or the deal falls through is because the preparation of the business to make it fit to sell has not been done. Optimize your business's operations and financials to maximize its attractiveness to potential buyers. Clean up financial records, streamline operations, and address any pending legal or regulatory issues. A well-prepared business not only enhances its value but also instills confidence in potential buyers.
This is at the heart of what we at Dexterity Partners do, every deal we make sure the business is fit to sell and ensure the preparation is done correctly and done early. This helps the process go smoothly and at the same time gets the best value for the business.
For further information and impartial advice, feel free to contact our founders at Dexterity Partners:
Simon Brayshaw - Simon@dexteritypartners.co.uk
Jonathan Priestley - Jonathan@dexteritypartners.co.uk