The prospect of your exit from the industry by way of a sale is usually a daunting one and something that people often don’t fully understand when they come to look at their options. As a result, a large part of our role in helping people to sell their businesses is in the guidance around the process and the marketplace. It is important that you get it right, but how can you learn from past mistakes when you are only going to sell your business once and have no prior experience to draw from?
That’s where we can help.
By sharing our experience with you we can ensure you do not fall foul to the common pitfalls that we have seen time and time again. If you are actively planning around a future sale, or are simply looking to better understand what’s ahead, please consider the following hurdles to help you have the best possible experience, and of course achieve the best outcome for you and your clients:
- Not having clear objectives
- The decision to sell your business and who you decide to sell it to is a big one. Vendors often think about their exit plans and keep an eye on activity in the marketplace but actually fail to learn about the options available to them. Because of this, they do not have a clear plan of action based on a route they have chosen to pursue, ultimately making the process that much harder. Getting the appropriate advice to understand the process and what is available in the marketplace will allow you to build realistic and achievable objectives, which in turn will help you to assess buyers and their offers to find the right deal.
- Misunderstanding the Buyer – Seller relationship
- Even with all contractual agreements in place it is so important your relationship with an acquirer is built on trust. In a successful transaction, both the buyer and the seller should be motivated by the same measures of success, i.e. retaining clients and offering a great and appropriate ongoing service. Do not forget that the buyer is planning to pay you an often sizeable sum of money for your business, plus you will need to be in contact with them or even work for them for years to come. Respect, good will and an appreciation for their process need to be central to your thinking.
- Not allocating appropriate resource
- Selling a business can be a full-time job in itself and when this isn’t fully appreciated the timeframes of deals that we work on can slip because of this. Whilst this may seem not to be an issue, with only half an eye on running the business through this period it’s important to be efficient. Take advice on how long this process will take for your sale scenario, what external help will you need and what internal resource will you need. Try your best to set achievable timeframes for your sale. You do not want to feel rushed at any stage in the transaction.
- Not understanding the whole market
- Over the past 2 years, the M&A market in financial services has diversified greatly. There have never been more routes to market than there are now. You owe it to yourself, and to your clients, to investigate and understand the whole market. I’d suggest speaking with Gunner & Co. or booking a Free Market Overview to understand all the available succession options for your business, the pros and cons of each and, of course, the valuation impact. You don’t want to spend your retirement wondering ‘what if’. Afterall, you don’t know what you don’t know!
- Willingness to accept change
- One inevitable factor of selling a business is change, whether that’s an integration of a client bank into a brand new central investment proposition after you retire, or it’s as simple as a change of name above the door while you continue to work on with your clients post sale. Yet many prospective sellers are reluctant to embrace the possibility of change, regardless to what extent or what the true impact of that change may be. Change is not inherently a bad thing, in fact it might well work out to have a positive impact on your clients. It is important to keep an open mind when assessing the marketplace. This doesn’t mean you can’t be selective or for want of a better phrase, ‘picky’, but it does mean not dismissing something just because it’s different from how you’ve done it in the past. Take the time to accurately evaluate the quality of the buyer, their offering for clients and their motivations in acquiring your business or client bank and make an informed decision.
If you are well prepared and have realistic goals and expectations then you won’t be in for any nasty surprises! While this is intended to point you in the right direction there is clearly a lot more to it. As specialist M&A Brokers, we know the market inside out. Learn from our experience and utilise our knowledge to ensure you achieve the best outcome for you and your businesses. At the end of the day, it starts with a conversation– it’s never too early to start planning for that sale!