5 things more important than money when it comes to selling your business

What’s the most important outcome when selling your business? For most business owners, if they are honest, obtaining a satisfactory financial settlement is pretty high on the list. Quite rightly they want a good return on the investment they have put in to the business over the years, and to secure their financial freedom.

But, if that was the whole story, we would expect to see all of our clients taking the highest offer on the table. In reality, more than a quarter of our clients don’t take the highest offer - which begs the question, what’s more important than money when it comes to selling your business?

Terms and conditions

While closely associated with the value of any offer, the terms on which the offer is built are arguably more important. For example, ￡18m paid today may well be preferable to ￡24m if only 50% of that is paid on day one, with the rest paid as an earnout contingent on a whole host of performance metrics over the next 5 years.

Of course, that is subjective depending on your personal circumstances and how much influence you have over that future performance. The important thing is to work out what kind of deal is acceptable to you and then negotiate accordingly.

The future of your team

Many SME businesses have been built by the shareholders but with the support of a loyal team. Securing the future opportunity of this team is often something that ranks highly among business owners.

Cultural fit

As Steve Lees, MD of ATE Solutions and client of Entrepreneurs Hub, observes in this short clip, finding a buyer with a good cultural fit is important. https://www.dhirubhai.net/feed/update/urn:li:activity:7107332735504900096

It can be the difference between a very difficult handover and a seamlessly smooth one.

Speed of the deal

Although highly dependent on personal circumstances, we have seen situations where achieving a quick transaction has been more important than getting a higher offer. While never ideal, it’s important that you share this with your corporate finance advisor at the earliest opportunity as it may shape the approach and narrative of the sale process.

Legacy

A business is about more than turnover and profits. Many business owners take pride in providing local employment opportunities, bringing investment into local areas, building a recognised and trusted brand, and fostering a reputation that reflects their own values. If these things are highly important to you when you set up and run the business, they will likely remain important to you when you sell the business. What the acquirer intends to do with the business after they take over from you then becomes significantly important to the sale decision.

Conclusion

With all of that being said, it is perhaps surprising that around three quarters of our clients do take the highest offer. That is down to following a tried and tested process delivered by experts in their field, including negotiation to ensure the best offer financially, also ticks the right boxes in all the other important areas too.

If you want to find out more, get in touch: https://www.entrepreneurshub.co.uk/contact/