Things no one tells you when selling your business!

Owning a business is really tough. No one truly knows until they do it. In my case, I invested my life savings, burned through everything I had, moved into a studio flat because that’s all I could afford, didn’t take money out of the business for two years, borrowed money from my ex-wife so I could feed myself and buy the kids Christmas presents, and my girlfriend took out a ￡10k personal loan to see us through.

At the same time, I lost friends, lost my hair, my six-pack, gained 20kg, forgot what restaurants or clothes shopping were, and holidays became a thing of the past. I also worked every waking hour; sleep became time I was wasting instead of working. Switching off wasn’t possible, your business takes over your brain. It never stops, even on a Saturday night just as you’re off to bed. And finally, if you have kids, you will neglect them. I can’t count the number of times I could have spent time with them on a weekend but instead had my computer open, sorting out a problem or thinking about how to grow the business.

The dream is to build something great, earn a fantastic living, be your own boss, get to a point where you spend less time running the company, and then eventually sell it so you never have to work again and can go sit on a beach, ensuring your family is financially stable when you finally kick the bucket.

I finally got to a stage where it became time to realise that dream. And that’s when the hard work started!

EBITDA, adjustments, SPV, working capital, SHA, SPA, ARR, MRR, indemnity, earn out, warranties, covenants, FDD, HOT, LOI (I could go on and write 10 pages on this, but you get the idea), these are just some of the things you need to learn and get your head around when you sell your business. Then there’s the fact that the money you spend on advice from accountants, tax advisors, and lawyers is enough to buy a brand-new Ferrari. I really should have been an M&A lawyer.

If you’ve ever bought or sold a house, this isn’t that. Multiply it by 500 and add a tanker of stress on top.

But you get through it. Most of the above you can learn and get your head around, but there are a few things people don’t talk about much, things I didn’t expect and that surprised me a little. I thought I’d share them for anyone who’s interested.

The Emotion of Selling Your Business

You risk everything to create this amazing machine, and you put your heart and soul into it. Especially with a business like ours, you become inextricably linked with it, it’s almost as if you and the business are one and the same. You start doubting yourself: is this the right time to sell? Even when the money is right, those thoughts still creep in. In my case, I had to remind myself of the reasons I was selling. I was shattered! I also know my limits, and it takes a very different skill set to run a business this size, with this many customers and staff. But still, you have your doubts, and you have to be aware of those emotions. Fortunately, I’m pretty rational, and I wasn’t changing my mind every five minutes, pissing off the buyer. When I make a decision, I make it, but it wasn’t easy at times, and it’s not something I expected. Letting go emotionally is harder than I thought!

Telling Your Staff

I have never, in my life, been nervous. Anyone who knows me knows I can walk into any room and immediately be comfortable, often taking control of it. The day I got the staff together to tell them was the first day I’ve ever felt what people call nerves! I was sat there, with everything planned out (which I never do), sweating, a complete mess.

You see, we built a culture here that isn’t what you normally find in most companies. We demanded a lot from the team, but in return, we gave them something most people could only dream of having in a job. I remember when Gabi first joined and I called her at 7pm. She said in her old job, she would never answer the phone after 5:30pm. But here, she’d answer at any time because of what we gave her. One of the staff needed money for something personal, no questions asked, we paid it. One of the team had family issues, “Forget about holiday, here’s some money, get on that plane and don’t come back until it’s sorted.”

But they gave everything too. It was a partnership, like a great relationship where you both give and take and never count who’s done more or complain about fulfilling your side of the deal.

And I’d betrayed them. We had changed their lives for the better, promised them a future, and given them something they loved. Now, we were running off with the money and leaving them for dead, or at least, that’s how I felt.

Of course, we weren’t really leaving them. We’re still fully involved and, to some extent, closer with them than ever. But the feelings of betrayal were insane.

I got through the meeting, but only just. :)

Stopping Is Difficult

So, the big day comes. Contracts are signed, the money hits the bank, and you think, “Ah, now I can relax.” Except you don’t. The stress is certainly gone, those annoying business things are now someone else’s problem. But once an entrepreneur, always an entrepreneur. I’ve got business ideas running through my brain every five minutes, investment ideas, but mostly, I think about the customers, how we can improve our service, and how we can help them with their businesses more than ever. In fact, now that I actually have a bit more time, I think about it even more! So, the idea that you sell and go sit on a beach was not the case for me, or that you no longer care. When you sell the business, most buyers want you to stay on for a while. In fact, the restrictions and contracts are so in-depth and onerous that you’d have to walk on water to get away. But funnily enough, they’re not really needed. This month, I’ve been on an operating table and still worked the next day. The new owner is practically demanding I take a day off, but there are things to do, customers to talk to, emails to respond to! I’m sure some people can go off and sit around for six months doing nothing, but not me.

You Become More Frugal

You become the richest poor person you know. When you have a business, especially a very successful one, the profit rolls in every month. You don’t think twice about spending money, who cares, you buy a Ferrari, and the money is replaced next month. But once those bank accounts belong to someone else, that all ends! You now have a pot, and you become protective of it. You start shopping in the saver aisles :) That holiday in the Maldives suddenly looks a bit more expensive than it did a month ago. Be prepared to act like you’re back at uni with no money!

Solicitors

Holy shit. I could buy a house with the money I spent on them. And although they offer protection and reassurance, they cause just as many issues as they solve. Be ready for some legal headaches, and expect to spend a lot of money! In hindsight, always negotiate a cap!

Think About When You Sell

Don’t sell in August. No one’s around. I forgot about that bit. I’m an idiot.

The Person You Sell To Is Almost More Important Than Anything Else

We’ve had plenty of offers over the years, and we always knew we had to find the right person. The money was almost secondary. One offer was actually ridiculous, but they wanted to fire everyone and just take the accounts and consume the business into theirs. There was no way that was happening, either to my staff or to our loyal customers!

We spent about 12 months discussing the sale, lots of dinners, meetings, many of which were more social than business. That was so important. For the last four months or so, we spoke every day, often just about holidays or things that were happening in life. We even let the buyer come up with a maternity policy six months before the sale, which showed he had a very similar outlook to us. It’s incredibly generous, but it showed he was serious about our culture and looking after the team.

You have to like the person you’re selling to, and I would never suggest selling to anyone that you haven’t spent time with.

Acquisitions are hard, no matter what. We had some pretty strong disagreements. I fought my corner, he fought his, and we had some uncomfortable conversations. Some, especially toward the end, let’s just say, wouldn’t have made for comfortable listening (Hannah cringed on more than one occasion listening in on calls). But when you find the right person, he gives a bit, you give a bit, and you end up in a place where you’re both happy. Ultimately, none of it was personal, we both understood it was just business.

It’s a high-stress situation and life-changing money. Your sale will fall through if you don’t have a good relationship. But there’s more to it than that…

Once you’ve sold, there’s a new sheriff in town. If you think he’s a dick, your life will be miserable, and you may as well not have sold the company. And no matter what, teething problems will occur. But when you can say to the new owner, “That was a bit fucking stupid,” and he says, “You know what, you’re right,” the entire process becomes very easy. Mistakes will always be made on both sides, everyone’s learning, but there’s nothing better than having a partnership with someone who can admit when he’s got it wrong and who isn’t scared about how you’ll react if he’s not happy. Both egos need to be left at the door. You have to come at this like parents, the kids (the business) need to be looked after. You can’t be arguing and fighting, as there’s still a company to run.

There are things I’ve got wrong, but knowing that the new boss isn’t sitting there blaming you and takes responsibility too means that this part of the process is, quite honestly, a dream.

So, choose wisely.