Thinking of selling your business? Read this first!

An introduction to the main drivers for selling a business, common pitfalls, and tips to get achieve a great valuation - and the realities of life after exit

haysmacintyre logo-resizeShow me the money! Surely the driving force when entrepreneurs come to cash in their chips is the desire for financial gain, isn’t it?

Not necessarily so. As with life, the motivation for exiting the business you’ve ploughed blood, sweat, and tears into, tends to be more nuanced. Selling a business is likely to be among the biggest things you will ever do – in a number of ways.

That much was obvious when Growing Business and haysmacintyre, award-winning Chartered Accountants and Tax Advisors, conducted a recent survey of entrepreneurs running fast-growth companies. The respondents, who collectively form our Young Guns, are all founders of the exciting UK businesses who started up while still aged 35 or under.

And it’s clear selling a business is not something you take lightly. Zack Feather, who together with Louie Evans, built The Pathology Group into a healthcare recruitment business with revenues in excess of £50m and in 2013 he was named a Young Gun shortly before announcing the sale of his business for an undisclosed sum. “People say, divorce, death and moving house are the three most stressful things in life,” he says, “but selling your business is without doubt up there with them.”

So how is it likely to affect you?

Emotionally, you’ll have built a team that have come to be like family. Often compared to parenting you’ll have taken the seedling of an idea, a decision to do something different and to solve a problem, and turned it into an entity that customers, employees, and you have come to love and rely on.

Financially, if you’ve built a fast-growth business it’s likely you’ll be looking at a monetary gain of millions, which could fundamentally change your lifestyle and provide opportunities, such as angel investment, that were once beyond you.

Physically – at least once you’ve worked an earn-out period if it’s required – you won’t have somewhere to be every morning and will have time on your hands, which could be exciting or feel like a void in your life.

The reasons for accepting an offer on the table are wide, varied, and for entrepreneurs who have been through the process and now reflected, go beyond the mere consideration of cash.

Dan McGuire, named a Young Gun in 2008 when he was running Broadbean Technology, was 27 when media giant DMGT acquired the business. For him, a combination of factors appealed yet he admits he agonised over it for months. “I liked the idea of banking a good amount of cash, having the experience of an exit, and working for DMGT for a few years and being in a great position to start another company.”

For the entrepreneur still toiling day in, day out, to make things work and achieve their ‘mission’ it’s perhaps inevitable that a glorious horizon laden with riches figures high on the list of driving factors.

For the survey we separated our Young Guns into near-equal groups of pre-exit and post-exit entrepreneurs to see how myths and expectations surrounding the process of selling a business compared to reality.

We’ve broken down the key findings into a handful of vignettes to share some of the main findings, anecdotal experiences, and insight from haysmacintyre. You can click one of the links below or the button above to read the next page.

Comments

(will not be published)