Selling Your Business is Like Running a Marathon
Christine Nicholson
Helping ambitious 7-figure owner managed businesses get their ideal 8-figure exit ?? Getexitready.co.uk ?? Exit Strategist Transforming Businesses for the Ideal Exit for the Owner
As a business owner, if you are thinking I’ll sell my business when I’m 50 and retire on the millions then you need to start thinking about the exit plan and options NOW and if not now then at least 3 to 5 years in advance.? No preparations are wasted and it provides protection for you, your family and your employees.?
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Like marathons, selling (or any form of exit) is a big deal.? Selecting the race is important – some exit option are more common (and better known) and some are harder and need either specific performance or longer term planning.? Not every exit option suits every style of business or business owner.? Actively selecting your exit option before being pushed into the only choice you have because of circumstances will give you a better outcome for you, your employees and your business.? You have a choice – and the earlier you make a plan, the more choices you have.? I often find that business owners think that their only option is to sell or close.? Equally when a business owner is proud of the dependence the business has on them (“My business couldn’t run without me”)? I know their business is worth less than it could be.?
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The timeline and option planned leads to the right kind of ‘training’ (otherwise known as preparation).? Exit planning is exactly the same as planning your run strategy for a marathon.? The more prepared you are, the more value you will get.? And you can prepare and be prepared – it means you are exit ready no matter when the exit is or what unexpected events occur in the meantime.? Lack of preparation is one of the main reasons the sale of a business fails at the Due Diligence hurdle.? 80% of business that go to market do not get sold.? And slick sales and marketing by volume brokers can suck you into believing that your business is one of the 20% - only to be still sat on the shelf a year later.???
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Sadly around 55% of business owners leave their business due to unexpected circumstances – the big 4 D’s are:?
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No one plans for these events and a significant number of business would be insolvent within 12 months if their business owner were unable to work in the business.? That’s not just sad, it’s a tragedy for the families who rely on the business for their livelihoods.? That doesn’t mean you can’t be prepared.? Preparation protects you, your family and your business.? And it’s not as hard as you might think.???
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If you watch the big televised marathons you’ll hear commentators talking about the elite runners race plan – they may even go to the mass of runners (maybe the odd celebrity runner) and ask about their race plan.? Expected finish time, fuelling and footwear tactics and avoiding “the wall” are often mentioned.? Exiting your business and getting the most value out of it is no different.?
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Having the plan in place does not mean losing choices if you change your mind or a different opportunity presents itself.? A significant amount of exit planning is the same no matter what the end result.? As with race planning, you are looking to optimise the outcome and reduce the risks of pain, injury or not finishing.? Making it as enjoyable as possible is an additional benefit – not forgetting that it is a marathon journey.?
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Once you are ready, the race day comes round and it’s literally a marathon!? Selling your business (or any form of transfer of ownership) is a process.? As running is putting one step in front of the next, so selling is a step by step process to navigate over a period of time.? At this point having your exit team in place pays dividends.? A wise business owner has the same style of team as an elite athlete – the support of an expert advisor, a broker, an M&A lawyer, a tax advisor, their accountant are all recommended.???
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The process included:?
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If you’ve got though the first 25 miles you don’t want to fall at the final mile – equally no one wants to crawl across the line.? Run (or walk) upright across the line and collapse immediately afterwards seems to be the main aim of most non-elite runners.? I’ve stood at the 25 mile mark on the London marathon a few times cheering people into picking up the run for the last mile.???
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The sale process is the last mile of the journey and it’s also the most fraught and difficult phase of the journey.? Two things I’ve seen in just about every business sale process has been the business owner hitting exhaustion and asking:??
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Buyers want to understand and mitigate the risks they are taking.? Sellers want to move in with their life and have now been distracted by the sale process.? The more you are working in the day to day of your business the harder the selling process is.???
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The final contract includes the actual detailed contract to buy the shares of your business. If you are staying with the business it will also include the employment contract on which you will continue.? I’ve seen the details left to the last minute and the business owner signing conditions they would never have agreed to at the beginning of the process if they had been prepared.? This often leads to the business owner leaving lots of money on the table if they leave earlier than their earn out period.? The money means less than the pain of staying in a business they no longer own that is going in a direction they don’t like.?
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This comes back to planning and preparation which equals protection of your business value.?
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Are you ready to leave your business (no matter when you want to)???
Click?here?to contact Christine by email alternatively you can?book a call?with the Business Mentor of the Year 2020,?author?and speaker. Who helps business founders get their businesses exit ready so they can enjoy a happier, richer future.? She saves them THOUSANDS and increases the value of their businesses by MILLIONS.?