For some business owners, the idea of leaving their enterprise on the first day after it has sold is the last thing they want. Many businessmen and women have worked hard to build up their going concern to the point where it becomes viable to sell. If so, the sheer emotional attachment you have with your company can have an impact. It may mean that it is preferable to stay on in a consulting capacity whilst the new owner takes over the reins, for example.
So long as you know that you want to stay on in some sort of capacity post-sale, then there should be little in the way of achieving this. These days, few potential buyers feel negatively about the idea of the current owner sticking around for a while after the new management takes over. Indeed, where there are employees to consider, a sense of continuity following a takeover is often beneficial. It can allay fears and be beneficial for both buyer and seller.
Having said that, some business owners want to get out immediately after the conclusion of contractual matters. You might fall into this category and wonder whether you will be free to pursue new business interests, to retire or to simply enjoy the money that will be coming your way! No matter what your reasons for desiring a swift exit post-sale, read on to discover what you need to know…
If being able to walk away on day one of your new life is essential, then you need to make this a part of the sale terms from the outset. If not, then buyers who are feeling positive about making a reasonable offer for you business can think that there is a hidden reason for you wanting to pull out quickly.
Should buyers know that it is always your intention to leave as soon as possible, then this does not seem suspicious. Alternatively, suddenly finding out from an owner that there is no chance of a handover period can make some buyers feel uneasy. If you don’t want to convey this sort of disquiet to potential buyers, let them know your intentions early on.
Like anything related to sales and marketing, selling a business works best if there is a cogent narrative. This does not mean that you need to spin a long yarn about your reasons for wanting to move on after the sale. All you need to do is to give buyers a compelling reason for doing so. Perhaps you want to spend more time with your family? Perhaps you are ready for your next business challenge? It really doesn’t matter what the reason is so long as it rings true to would-be purchasers.
There is an often expressed belief amongst entrepreneurs. It says that when you sell your business, it is a final moment in one part of your life and you should be ready to move on without hesitation. The truth is that few of us operate this way and even the most entrepreneurial spirit is capable of looking backwards as well as forwards. Staying on in a business you have built might feel a little odd at first once someone else runs it. However, this sensation usually settles down. In fact, working alongside a new owner is frequently exciting and offers new and dynamic challenges.
Secondly, acquirers are often seeking a good transition period. If you want your business to succeed after your departure, then staying on will help it to succeed. A sudden change of hands can have a negative effect on business performance, after all. Buyers who are serious about making a go of your enterprise will often ask you to stay on as a consultant. Don’t think of it as suddenly moving from being the boss to occupying the role of an employee. Only the most short-sighted of business buyers would operate in this way. Expect your expertise and business knowledge to become highly valued commodities.
If you continue to work as an advisor or a consultant, then there is nothing to stop you getting on with your other business concerns – so long as they don’t directly compete with the business you have just sold, of course. Even if you are staying on in a full-time capacity, the transition period will come to an end soon. Buyers typically ask current owners to stay on for anything from a few months to a few years.
It’s possible that the new owner may want you to help maintain its high performance post sale. This helps to protect them against the sort of business that starts to fail as soon as the owner leaves. If this is the case, any demand for you to stay on should maintain a link to performance-related bonuses. If you are going to help the new owners to grow your business, then incentive ought to play a part.
Although the option of leaving as soon as the sale completes might appeal, consider where this truly leaves you. Many entrepreneurs will want to set up a new business straight away. However, you must look out for sale clauses in your agreement that might restrict this desire.
You need to consider non-compete clauses and anything that restricts your use of intellectual property. This is especially so for any ideas developed while you were running the business. It might not belong to you any more! As the previous business owner, the inability to do as you wish could be a shock.
In summary, there are clearly a few options for business owners to weigh up post-handover. The most satisfactory outcomes are rarely based on solely what the seller wants. It will come down to a compromise between what you want and how the buyer wants to organise the handover. After all, they are the ones with the cash that make leaving possible in the first place.
We help peoples and businesses who want to sell their business, or acquire, in the best possible way. Speak to the independent M&A experts on 0333 050 8225. With our vast experience in the M&A industry, we are able to help you today.
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