Sell your business without tears
No pain, no gain is often the mantra of entrepreneurs as they sweat to build their business to the success they dream of. But it is not an attitude that should haunt you when you come to cash in on that success and realise the value of the asset you have built, says Caren Rennie, New Business Initiatives Manager at Deal Leaders Africa.
“Your business is often your life’s work and you have invested a huge amount of sweat equity in it,” she says. “This usually makes selling such an emotional journey.”
That is why many sellers find they prefer not to flip the business quickly, simply selling to the highest bidder and walking away. Your business has usually become your biggest asset so you owe it to yourself and your family to get a good price and the best possible fit with the buyer, she believes.
“For many entrepreneurs, their business is like another baby and saying goodbye to it and to colleagues who have walked the road with you is like losing part of your family,” she says. “That is why you need a deal team that walks the sales journey with you and focuses on how the sale can maximise your legacy and the future growth of the colleagues you see as ‘your people’.”
The same factors are even more important if you are staying in your business but selling part of it to bring on board a strategic growth or BEE partner, says Rennie.
“We really get to know the business, its market and its potential so that we can look for a deal that does more than match your interests and strategies,” she says. “Ideally, it should go beyond this by complementing your strengths and visions. It should be synergistic so that the result becomes more than the sum of the parts.”
This approach can quickly narrow down hundreds of expressions of interest in a business to four or five serious contenders. It may also involve presenting the opportunity to complementary businesses.
“Usually this would be a business that already has a non-competing product that it markets to the same client base as the seller,” says Rennie. “This then positions the acquisition as a bolt-on to the buyer’s business that offers great opportunity for exponential, organic growth.”
The process is never short and can easily last nine to 12 months so one of the biggest risks is deal fatigue, she says. Only one candidate buyer can deliberately drag this out to wear down the seller into making concessions. Creating a small pool of potential buyers instead makes for a competitive space.
The seller then has the power and potential buyers have to behave better. Acquirers are aware that they are not the only party in the process and this helps keep them transparent and on deadline for key stages such as a non-binding offer.
“By the time the sale is completed, sellers should be confident that they have chosen the best buyer who will take the business to new heights,” says Rennie. “This helps them feel liberated and ready to tackle their next project, whether retirement or business reinvention, with energy and enthusiasm.”
ABOUT DEAL LEADERS AFRICA
Deal Leaders Africa is a niche corporate finance advisor that works solely with and for the business owner. The 18 members of the Deal Leaders Africa team contribute more than 125 years of pooled business experience to the company that was founded in early 2017 and is headquartered in Sandton, Johannesburg, South Africa.
Deal Leaders Africa typically has about two dozen deals valued at more than R1 billion in the pipeline and makes between 200 and 300 engagement calls a week to potential acquirers and investors. The company has access through its local and international network to more than 1 000 000 acquirers of businesses globally.