Many business owners believe the act of selling their business is similar to passing the baton in a 400-metre relay. Once the ink is dry, you’re done and you get to relax.
In reality, buyers will often insist that you stay on for a handover period that could be anywhere from five days to five years during which time you continue to work in the business, to help the buyer make the most on the investment they are making.
Looking for a handy checklist that will walk you through all that’s needed when preparing your business for sale? We’ve created one with all you need – and you can download it here.
So What is THE Question?
At some point, all buyers will ask you, often quite casually, “Why do you want to sell your business?” BEWARE! These simple words can de-rail more deals than any others.
Buyers ask THE question to understand:
- how likely you are to stay on after sale
- more importantly, how willing you are to stay on after sale
- or if you are already mentally heading out the door
Obviously you dont want to lie, but there is a right and wrong way to answer THE question.
Answers like “I want to slow down a bit” or “I want to travel” or “we’ve got a baby on the way and I want to spend more time at home” communicate to a potential buyer that you plan on winding down when they take over. However, what they want to hear is your intention to help them realise the potential locked inside your business. The potential you are probably promising them is there!
Knowing the right time to sell your business is one thing, but are you ready once that time comes?
Here are some suggested responses based on your age.
Under 40 –
You clearly aren’t ready to retire, so you need to communicate that you see an upside in engaging with someone with their expertise:
“In order for us to get to the next level, we need to find a partner with more <insert sales people, distribution, geographic reach, capital or whatever the buyer brings to the table>”.
Between 40-55 –
Most people will understand the need to shore up your personal wealth:
“I’ve reached a time in my life where I want to create some wealth from the value I’ve created so far, and at the same time I need to find a partner who can help the business get to the next level”.
Over 55 –
You can start to talk about retirement, but you want to make sure you communicate that you still have lots of energy and passion for your business.
“I’m at a stage where I need to start thinking about retirement. Its a way off yet, but I want act early enough to ensure I can pass the business on, so that it thrives under new ownership”.
Practice your answer to THE question, so it is a natural response when you are inevitably asked it by a potential buyer.
Uscita Solutions Ltd is a firm of business brokers. We work with business owners, helping them prepare their businesses, and themselves, for sale. If you are interested in planning your exit, a business valuation or growing the value of your business before exit, please contact us today in the strictest of confidence. Call 01606 535020
Here at Uscita we are Certified Value Builders, helping business owners grow the value of their company using The Value Builder System™. There are 8 key areas that a buyer will look at when acquiring a business.
If you’re curious to benchmark your company on growth potential and the other seven factors that drive your company’s value, take 15 minutes and get your Value Builder Score here: Get Started now.
Paul Dodgshon is a Certified Value Builder at Uscita, who have been helping business owners sell their businesses since 2005. You can learn more about Paul here.