If someone wants to buy your business, it's good news isn't it? In principle, yes! But bear in mind the deal isn’t done until the contract is signed. So take a breather and consider what an approach to buy your business actually means – it may be the best thing that could happen or it could be a huge disappointment if a sale doesn’t materialise or your business is worth less than you thought (in short, if the outcome isn’t as you expected it to be).
Selling your business, or your share of your business, is no different to any other sale in that it has both objective and subjective elements. To get the best outcome from your business exit you need to work on both.
A potential acquirer will look both at the facts and the story you tell. Different acquirers will place different amounts of emphasis on each. The prevalent view on business sales and valuations is that it is driven by assets, financial record, risks and potential.
The exit planning process is designed to give you the outcome you want from the sale of your business or your share thereof. Previously we described the first three steps: determining your desired outcome, considering the perspectives of other shareholders and stakeholders and evaluating the current performance of your business.
The fourth part of the process is to ensure you have a plan for the business that results in your desired outcome i.e. the value and conditions of exit you desire at the time you want it.
In the first two phases of exit planning we review what you want to achieve from your exit and consider the needs of other shareholders and stakeholders, who may have different perspectives and timescales to you.
The next step is to assess your business to establish the likelihood of you achieving your desired outcome.
In our previous article we talked about the different types of busines owner and the importance of setting out your desired outcome from a future exit. If your future and that of your family is dependent upon getting the transfer of ownership planned and executed well, setting out your desired outcomes is a key step. If you are the sole owner of your business this is relatively straightforward. However if you are a co-owner you may have a more complex situation to manage.
There are four types of business owner when it comes to how your exit or ownership transition will come about. Which one are you?
If the terms of your exit are important to you then you might consider some help – particularly if you are thinking two to five years ahead.
Depending on the industry you are in, your interpretation of ‘long-term’ will vary considerably. In oil exploration or pharmaceutical development ‘long-term’ can run into decades, for an online retailer your horizon will be considerably shorter.
However, what about your personal long-term planning? If you own your business, either alone or with other shareholders, what have you planned for?
We are 12 months into our virtual lunchtime conversations which have taken the place of our long-standing and popular lunches.
Each month for the past year our invited guests have discussed a business related issue, shared experiences and offered tips and advice to each other. Inevitably some of the discussions dwelt on the pandemic and as business owners how we have coped, survived and thrived with the unique circumstances we have faced.
But we have also discussed a wide range of subjects that have helped us all with ideas on how better to manage our businesses. Read more for examples of our conversations.
If you are a fan of the TV show, ‘Love It or List It’ you will recognise the formula.
A family is given the choice between a make-over of their current home, courtesy of Kirstie Allsopp, and a new home found for them by Phil Spencer. At the end of the show, the family is asked of their refurbished home whether they will ‘love it’ and stay or ‘list it’ and move.
What has this got to do with your business?
When asked, “Where do your best leads and clients come from?” most people will answer, “From referrals”. When you are contemplating the sale of your business one key attribute is a strong pipeline of good leads – and that’s exactly what an effective referral strategy can provide.
We have talked to other business owners and they are taken aback that we forecast our revenues, costs and cash flow
We’ve written a number of guides on selected business subjects that will set you and your business in good stead for whatever future you may choose.
These are free for you to download and to make use of in your business, so please help yourself.