Receiving an acquisition offer is exciting. You’ve presented your business (and your professional reputation) on the table and someone has come by and found it appealing.
But before you start planning your retirement, just remember that almost half of all acquisition offers don’t make it to the final stages. In fact, receiving the offer is the easy part. For most business owners, it’s closing the deal that’s difficult.
After piquing a potential buyer’s interest, there are a lot of factors which come into play during the business sale process that could make or break the success of the transaction.
Selling your business is a deeply conflicting and personal decision, and the ramifications affect not only yourself, but your staff as well.
Whether you have 3 or 300 staff working for your business, the decision to tell them you’re planning to sell is something many business owners will struggle with.
It begs the question: Should you tell your staff you are thinking of selling your business? If so, when?
Trying to find the words to tell your employees you are selling, and knowing the best time to do so is a challenge. One that there is no perfect answer to. It is a deeply personal decision for each business owner and only you can decide on how and when you will break the news.
Being honest and transparent about decisions which will affect your team may seem like the ethical thing to do. Especially if you have developed close working relationships.
But doing so also presents a large number of risks:
- Employees no longer feel like they have job security. They immediately start looking for another job.
- Competitors may find out, and try to use this information against you.
- Loyal customers may end up leaving you for competitors
If any of these outcomes were to occur, your potential buyer could use this information to their advantage in the transaction process. Depending on the severity of the loss, a worst-case scenario may result in an offer being withdrawn and the deal falling through altogether.
Another morning. Another coffee.
The phone rings, only this time it’s not any enquiry.
Someone wants to buy a business… your business!
After the initial shock has worn off, reality sinks in. It’s only natural to get excited about the situation!
Next comes thoughts of living it up on a tropical island and making plans for the future.
Being financially secure with your retirement nest egg already in place is the dream. But it’s also a trap to get too far ahead of yourself before finalising an acquisition.
The ultimate dream for many business owners is to have a business that's not reliant on them to show up everyday.
Not only does this create more personal freedom, it also impacts the value of a company.
A company which runs on autopilot is highly sought after by buyers, and they are willing to pay a premium to find one. But, a company that requires hands-on involvement from its owner is likely to result in a heavily discounted offer.
Why? Because an acquirer wants to know that when they take the reins, the business will keep generating a steady stream of income, and it won't all fall apart because you've left!
This upcoming summer, consider the possibility of giving yourself a lengthy break. See how your business runs while you’re not around.
It’s highly likely some things will go wrong. But by identifying areas that need improvement, you can put steps in place to take your business one step closer to operating independently - while making it more valuable.
Here is an Eight Step plan towards Owner Independence for your business
You know it’s important to have systems and processes in your business.
After all you won’t be able to scale without them.
Right now, the business is still heavily reliant on you. This is making it harder to keep on top of things and allocate time to focus on growth.
That’s why you’ve started taking time to write out procedures.
You’ve documented them in a manual and explained them to the staff. You’ve even placed them in a central location so everyone can have access to them.
The problem is, the staff seem to just ignore them and choose to do it their own way!
Often the issue is not the actual processes themselves, nor the staff.
It’s the way the information is presented.
Family businesses form the backbone of economies the world over.
Examples include Amy’s Kitchen, started by a US couple who turned their kitchen-based organic food business into a $500 million turnover company, and the fifth-generation Finnish paper firm, founded in 1851, that today is one of the world’s largest and most successful fibre-based businesses.
Highly profitable family firms such as these can also be found here in Australia. They include the Fairfax, Myer and Linfox companies, all of which were once small family businesses. Though most family businesses don’t achieve such fame and fortune, they most certainly contribute significantly to our economy, accounting for 70-percent of all businesses in Australia while turning over an average of $12m each per year.
Have you ever wondered what determines the value of your business?
Perhaps you’ve heard an industry rule of thumb and assumed that your company will be worth about the same as a similar size company in your industry. However, when we take a look at the data provided by The Value Builder SystemTM, we’ve found there are eight factors that drive the value of your business, and they are all potentially more important than the industry you’re in.
Not convinced? Let’s look at Jill Nelson, who recently sold a majority interest in her $11 million telephone answering service, Ruby Receptionists, for $38.8 million.
Your business has supported your family, supported your dreams, supported your employees and has made a difference to many lives.
Let’s face it – you’re still in business so you’ve obviously done a lot and your business has proven its worth over many years.
Whether you are looking to retire to spend more time with your family and living your dreams, whether you are looking to retire because you’ve always had a goal retirement age or whether it is simply time to hand the reigns to the next generation, the fact is – you’ve decided to retire.
How carefully have you really considered your business in that decision?
How bold will you be when it comes to selling a business?
Dan Martell was willing to go big! In a recent interview with John Warrillow, Dan explained how he invited 5 CEOs, from likely acquirers, into a competitive bidding process for his company. His success rested wholly on one thing…Knowing precisely who his likely acquirers were.
Much like selling a home, your business is likely to be one of the largest sales you will attempt. It is also highly likely that you will not be an expert in business sales, in which case, you should certainly turn to a specialist business broker.
Following are ten compelling and measurable reasons to use a Business Broker in the sale of your business.