For you and many other businesses owners ‘life on the other side’ will be very different. The pressures of being solely responsible for a business, its staff, its products, its service, its finances and, ultimately, its success will be suddenly lifted. But whilst this may well be a relief, for many owners it can leave a huge gap in their lives.
Starting with the sale itself, here at Firm Gains, we look at some of the key aspects of a business owner’s life, post-sale, that should be considered before selling.
Selling a business is the largest sale you may ever make and, as a result, the financial gain from the sale could be the largest you will ever receive. But how much should you expect? And, indeed, how much do you need? It’s natural, of course, to push for the maximum financial amount from a buyer but at some point, an owner needs to consider what is fair and also if the offer is enough reward for handing over your business.
But what is ‘enough’? For you it may be the amount you need to do everything you want to in the future, be it travelling the world, clearing your mortgage, investing in a new opportunity, buying a boat, in fact, any number of things.
Before taking your company to market, ask yourself this question and decide for yourself what is enough. Without knowing the answer there is the distinct possibility that pushing a buyer for a higher offer could cause a sale to collapse – and all for an additional financial gain that may not be needed.
For many business owners, their reasons for selling are to start something new, retire, spend more time with family or on leisure pursuits. But for some, the sale of their business is a ‘safety strategy’. By cashing in on their the value of their business now they can safeguard this money in the event of the business suffering a downturn or, worse still, falling into administration.
With this in mind, the owner’s aim may be not to leave the business, as this can be the last thing they want to do. In such cases, the owner will stay on to run the business as they had before and this is something which is very attractive to many buyers. They acquire a business which retains the owner, the person who has driven the growth in the business and has an unrivalled understanding of its operations and capabilities. It lowers the risk of business underperforming in the future.
Starting a business can be exciting. But once the initial excitement is over, some entrepreneurs find that dealing with the day-to-day problems like finding new customers and making a profit is less than satisfying.
From that point an ever increasing number of financial, procedural and operational procedures became the day-to-day norm; hardly the type of activity to excite anyone.
If you are one of these people, the opportunity to begin again, perhaps avoiding the mistakes you made the first time could provide an engaging and exciting new start. But a word of caution…
If you are planning to start a new business venture, perhaps within the same sector, then your choice of buyer may have a bearing on this.
It is not uncommon for buyers to apply non-competition clauses to the terms of a sale agreement to protect their new business. Although these will be time limited it may still mean putting such future plans on hold.
You have amassed a considerable and highly valuable amount of knowledge about growing a business successfully. Such experience is invaluable to many growing businesses.
If starting a new company, which could take up all of your newly freed up time, is something that does not appeal, then consider an advisory non-executive position within another company.
Selling your business may generate a considerable sum of money. If your current financial advisors are not equipped to advise you on the best way to invest this it is worth giving consideration to specialists who manage the financial affairs of high net worth individuals.
Such specialists can be adept at managing not only the investment of large sums but also of managing these in the most tax efficient manner.
The Seed Enterprise Investment Scheme is a government-backed scheme to boost business growth in the UK. It is designed to attract people like you who would like to invest in new and exciting companies. Aside from the financial benefits of investment, there are also tax breaks of 50% for doing so and the satisfaction of helping new business owners by applying your experience.
“You may already know what you want to once your business is sold but there are more options than many owners consider, such as seed investment, remaining in the business or non-exec roles. All of these issues can have a bearing on your sale process and the ultimate selling price.”