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Preparing To Sell Your Business – Are You Emotionally Ready?

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But The Journey Is Demanding

Selling a private company is an exhausting and demanding process for the owner. Few are ready for the emotional roller-coaster it brings.
 
For most private business owners the decision to sell their business involves as many emotional challenges as it does hard commercial decisions. Uncertainty, fear of the unknown, worries about the process, all play into what is going to be a life-changing decision.
 
 
The Decision To Sell Your Business Throws Up Uncertainties
 
Selling a business is a difficult enough process, but in some ways making the decision to sell is worse. As a longstanding UK business broker I have sat across the desk from many business owners going through this process – many of whom have gone on to become personal friends. Most of them are going around and around the same questions:

    Without the business will I have enough income to live comfortably?

    What will the business sell for? Will it be enough?

    What am I going to do with my time with no business to run?

    What will happen to my employees?

 
Tough Choices About Timing And Finances
 
Most people tough enough to face the challenge of starting or buying a business are determined to sell within their own time frame – when they are mentally ready to move on. As a business broker we often here some variant of “I will just know when it’s time”; often followed a few years later by “I know we would have got more by selling five years ago, but I just wasn’t ready at that time”.

As a private business owner you have every right to sell at a time that suits you. After all you started the business in order to be in a position to take that type of decision for yourself. The only insight I can offer comes from the perspective of having been involved with dozens of private company sales. Owners that sell their businesses at the peak, often in response to an unsolicited offer that came before they were mentally ready, always seem to make more money. It just seems that drive, and energy, and openness to new ideas tail off some time before many owners are mentally ready to retire.

Financial considerations are very much in the eye of the beholder. We can give you guidance on the range of values in which the business is likely to sell; and your accountant can help you understand how much will be left after tax, transaction costs and debt repayments. Only you know how much money is necessary to meet your lifestyle aspirations. One thing I can tell you for sure – there is no connection between the value of your business, and the amount of money you need for retirement. The value of your business is entirely dependent on the cash flow it will generate for the new owners. Emotion just doesn’t come into it.
 
What If The Business Isn’t Worth Enough To Retire In Comfort?
 
One option is to trade on and grow the profitability of the business until it meets your aspirations. This is the first reaction of most business owners, but the hard truth is that it rarely works. You already know how much effort and motivation it takes to grow a business. Turning a business around from a level at which it has been trending for several years is even harder. Especially when your motivation is already in “It feels like it’s time to retire” mode. In fact I can’t think of a single occasion when a business owner has gone down this route and come back to me a couple of years later with a significantly more profitable business to sell.

A second option if the proceeds of the sale won’t allow you to retire and do nothing, is to work for someone else for a few years – maybe on a part time basis. This can be a very comfortable position. One of the things that comes as a surprise to many former business owners is the sense of relief that comes from no longer being responsible for absolutely everything. The strain that comes from being responsible for making the payroll every week, from being responsible for the mistakes made by your employees, and just the overall responsibility for all the tough and unpleasant decisions that have to be made. Maybe the sale of your business won’t fund your aspirations on its own, but it will generate some cash to save or spend on something you want. Is that such a bad option?

 

If you are interested in finding out more about these and other issues relating to the sale of a private company one of our business sale experts would be delighted to talk to you in complete confidentiality. Click CONTACT ME to book an initial phone conversation or call us on 01604 432964.

 
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