From the TimesOnline. Read the article HERE.
WITH so much energy required to grow a business, few entrepreneurs pay enough attention to developing the skills needed to sell it.
Ashley Ward, chairman of the European Leadership Programme:
Many first-time vendors blow it, often through greed. Most people overvalue their own business. You have to be very pragmatic and tell it like it is, warts and all; any surprises will be punished tenfold. During negotiations, focus on running the business. If you have a bad month or lose a big customer, the deal’s off.
Michael Rendell, partner at Price Waterhouse Coopers:
Succession planning isn’t something you can do six months before you decide to move on. You need to identify a number of individuals who could step into the role you are giving up – ideally, two to three years before you sell, so there is time to develop them. Try to find several people: you don’t know where the business might be by the time you come to sell.
Gerard Burke, Cranfield School of Management:
The process of negotiating a sale is usually extremely time- and energy-consuming: many entrepreneurs tell me it is the hardest thing they have ever done. There are lots of issues around how open you can be with staff – and keeping it quiet can be very difficult. Then there’s what to do afterwards: for many people, it can feel like a bereavement when a business is sold. Start planning five years beforehand to get through the emotional and practical side.
Hugo Haddon-Grant, managing partner, Cavendish Corporate Finance
Quite often, selling is not as rational a decision as it might be. There could be a family problem or other issues that mean an entrepreneur wants to sell quickly. One of the big problems we see is people wanting to sell their business yesterday: with a bit of planning you can get a better value out of the asset.
It’s worth getting in a professional so you can continue to focus on running the business.
Dr Nick Gostick, incubation manager, BioCity Nottingham
You need to make yourself redundant. It’s likely with a trade sale that what the buyer is after is the customers. They will be looking for the business, not the business owner. A trade buyer will probably integrate your company into an existing business, and self-made entrepreneurs are often not very good employees.
If the business can function without you it’s probably more valuable – a business dependent on one person is very vulnerable. Making yourself obsolete is one step towards making the business saleable. Remember, once you have sold, you have got what you need; you’ve got the money and the experience, and that is a badge of honour that investors like to see. Now you can get involved in other businesses – and second time around is a very nice place to be.
Tommy Young, Bank of Scotland Corporate’s head of commercial banking for England and Wales:
Small businesses often become very dependent on one person. Succession planning is seen as something only big business needs to do but it’s even more important for the small business, where the void will be so large if that one crucial person wants to leave.
I see entrepreneurs so focused on driving the business that they forget to look at the longer term. The consequence is that it can then take them several years of extra work to be in a position to move on. The answer is to bring in people who complement your skills and give them the mandate to make decisions.