Selling a business as a going concern can be complex enough for sole owners and require the skill set of a professional to help you get through the entire process. However, when the company has more than one owner, the business of selling it can be even more complicated.
If you own a business with other investors, then some careful planning may be in order to make sure that a sale is possible and that it goes through smoothly once you have found a potential buyer. Of course, if you own 95 per cent of the business, then the decision making will still come down to you, but you will still not have the right to sell the other 5 per cent unless the other partner or partners agree you can do this for them. In such cases of a large majority shareholding, selling the jointly owned business successfully usually comes down to being upfront with the buyer from the start about what is on offer – your share only or the whole business.
In cases where you want to sell but only own a minority share of the business things can get more complex, still. Where you own half of a company with a partner, or even a little more than this – such as a 55 per cent shareholding, for example – you are going to need to agree things with your partner to make a successful sale.
Okay, you might not need their actual consent to sell what you own, but you are probably going to need their cooperation or potential buyers are not likely to want to proceed, especially if your partner is causing problems for you. In many cases, however, all the owners’ visions for the future of a company can be accommodated by simply discussing matters openly and honestly before you get into the business end of a sale. A little give and take may be required by all parties, but joint businesses can and are sold successfully, so there is no reason why yours should not.
If you want to sell and your partners do not, then they need time to adjust to the potential impact your departure may have. Your drive, enthusiasm and skills may be one of the key assets of the business, so your loss may be felt strongly causing your partner or partners to worry about the future.
If you can, give them plenty of time to adjust to these changes. Sometimes this might just be just a psychological shift, but in many tech companies it could also mean they need time to recruit new talent which will be able to replace you. If you need to sell up quickly, perhaps due to ill health or personal matters outside of work, then you need to tell you partners what is motivating you to proceed with a quick sale. This may mean you have to be more honest than you would like, but it is better that they understand the full details and do not think that you are holding back on something.
Ideally, you should have a twelve month plan prior to exiting your business.
The boardroom may be the domain where you are used to thrashing out business strategies and growth ideas. Nevertheless, selling up your proportion of the company is so much more personal than a typical business decision that you might find it better to approach future plans in a different way.
Why not invite partners to your home or discuss your long-term plans over lunch instead of in the office? The golf course is another favoured place for such discussions – it simply depends on the personalities of your partners. Remember that you are not telling them what you are going to do, but discussing their plans and future aspirations, too. It should be a two-way street.
If two or more parties decide to sell up at the same time, agreeing what is for sale and what is not will be crucial. If all the business is for sale, then you can split the capital generated from the sale up proportionally, according to the partners’ shares. However, if something is retained, an asset or the business premises for example, you need to establish who owns this and in what proportion prior to getting into discussions with buyers or the whole process will become unduly complex.
If one of you wants out before the other, then it is possible to organise your sale in a way that accommodates this. You could, for instance, sell up to a buyer who then purchases an option to buy the remaining share of the business from your partner or partners in a year or two’s time. This way, exit strategies can be staggered, helping to meet everyone’s expectations.
Once a sale is in process, many business owners can wonder about what to do with all of the time they are going to have. If you think you still have plenty to offer the business, then you could talk to the buyer and remaining shareholders about staying on in a directors role or even as an employee. This happens more often than you might think, but you will have to get used to not being the boss. It is also quite common to continue to support the business as a consultant for an agreed number of hours a month. You could either charge for this or include your services as a part of the business sale.
Make sure that you plan the next steps following a sale carefully. Keep working right up until the point of the sale, just in case something goes wrong and you need to start the process from scratch again. Once your part of the business has been sold, it is a good idea to have something planned so that you can immediately transition to life without the business.
If you decide that you want to develop new business ideas, then check your contractual obligations following the sale. Your buyer’s lawyer may well have introduced clauses about what you can do that might be in competition to your old company. This might include restrictions on the sorts of products and services that you might develop. It could even prevent you from contacting old customers and attempting to steal business away.
Lastly, retirement may be what you are after. If so, realising the maximum yield from your business sale is probably the best thing that you can do as a part of your exit strategy so it is important to start the planning as early as possible.
Because business sales can take a long time sometimes, make sure your other retirement arrangements, like pensions, can cover you for a year or two before a sale goes through – just in case of unwanted delays.
Explore the options available to you, improve your chances of successful sale.
If you’re seeking a business to buy, then we can increase your deal flow.
In the early stages of such an important undertaking, it can be a bit of a moral maze: who do you trust?
Firm Gains gave me confidence with detailed advice and support. I would recommend their services to other entrepreneurs seeking to buy a business.Mr T Washington , Founder
I found it much easier to get my head around a business sale this way than talking to my accountant. You speak a language I understand!
Even though the whole process of selling seems daunting, I’ve got more confidence that I’m heading in the right direction.Mrs T Boothe , Founder
Thank you for your email and the excellent advice provided earlier this week. It was immensely helpful and has helped me to plan my future direction for the practice.
I would have no problem whatsoever in recommending your services in the future.Mr & Mrs Halldron , Co-Owners
Firm Gains were recommended to me and I was not disappointed. They were efficient, helpful and effective responding quickly to my request with all the facts that were needed to ensure a stress-free dialogue with our buyer.
What really helped was the advice over and above the valuation, which was immensely valuable and gave me the confidence to proceed. I would not hesitate in recommending them.Mr C Waite , Founder
We found the advice invaluable, which was clear and concise and felt your firm had a good handle on market trends and business sectors.
With also the backup of the secondary services, there was a feeling you had all bases covered if we wanted to proceed with our exit via Management Buy Out (‘MBO’).Mr D Wills , Director
Thank you for your advice. I was just about to sign up to the wrong kind of business agent for a company of our size, but read your post just in time.
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