Ready to sell your Business?

Many business owners start out with the ambition of being their own boss, owning their own time, charting their own destiny and living extremely well on the 'passive' income they eventually build. This dream then soon fades for most as they realize the demands of running a high performance business, that has to keep being high performance into the future.

Then there are those who, in spite of their hard work, are becoming overwhelmed with the challenges of just being able to stand still and keep afloat.

There are a variety of reasons why someone would consider selling their business. Often, the real reason is never disclosed by sellers skirt around the real issues. This may be because the real reason may be too personal or embarrassing, or point to issues that may scare the potential buyer away. Based on our experience, here is a list of the most common underlying reasons that companies are sold;

"This market is overtraded and no longer lucrative" In this fast paced world, with increasing competition who appear more technologically advanced and cost effective, staying relevant is a a never-ending battle, the job is never done. The business isn’t making as much money as it once did. Revenues are declining and margins are being squeezed. The Covid world has also emphasized the weakness of traditional businesses, who have not digitized their operations. This is often why “old-fashioned” companies are put up for sale - hoping to be valued on yesterday's performance.

"I don't have a life and am reaching burn out"

The business owner, tired of being the star employee, has had enough - the business is no longer enjoyable and feels like a chore - fighting fires is a daily theme and the business momentum has started to slide. When the leadership feels like this, it spreads to the team (even if you think you're hiding it) and eventually your customers feel the same level of enthusiasm in dealing with your business. When the idea of running a business is no longer fun, it’s probably time to cash in your chips before it's too late.

"The business is cash-strapped" Businesses hit financial difficulty for a number of reasons, some of which are avoidable, others not. Robbing Peter to pay Paul has become a common theme for a while now. Sometimes, trying to grow too quickly can also kill a business with poor financial planning.

More recently, many good businesses have been hit by the covid crisis. But while bounce-back loans and related govt schemes may have helped to plug some holes, the demand levels and buying patterns of customers have started to work against the business.

"I'm clashing with my Partner" Some partnerships were doomed from the start, others serve their purpose for a period of time. A common reason why businesses are sold is because the owners have fallen out and have concluded that they should go their separate ways. Pulling in opposite directions can be hugely damaging for the fortunes of a business, leading to resentment, mistrust and lack of direction. In such circumstances, a fresh approach from a new owner might be all that’s needed to revive the business.

"I'm bored and need a lifestyle change" Owner-managers do get stale or grow bored from time to time. After some thought, they've discovered that they wish to live the remainder of their lives differently. Life is too short and no one want to have regrets towards the end.

"I'd like to cash in ahead of my retirement"

The business has given the owner a good living for a period of time and there is no longer the need to work at the same pace or they can afford to wind down. A business owner who wants to retire will understandably be concerned with who they will be handing their cherished business over to. They may well be leaving behind a 'family' along with a profitable business which has heaps of potential awaiting a new owner.

The experienced Buyers mindset

Any buyer worth his/her salt will approach buying a business with an open mind. Whether it’s being sold as a distressed or liquidated asset, or as a going concern, the story as to why a company is up for sale may be something of a tangled web – or surprisingly straightforward. The serious buyer is likely to do a proper due diligence whilst being mindful that most sellers are not inclined to provide the real reasons for the sale. It is important to be honest with the prospective buyer at the outset - it helps build trust and eases the negotiation. Flexibility and open-mindedness on both ends tends to get deals done more quickly.

Any buyer who discovers that they’ve had the wool pulled over their eyes, is likely to become more 'aggressive' in their offer. Furthermore, experienced buyers (who have been caught it the past) are less likely to do cash deals without guarantees/earnouts and will require reasonable handover periods.

At Excelerate, we specialize in helping and acquiring both underperforming and solid SMEs throughout the UK. Apart from assisting with funding requirements, we also offer cutting edge solutions for struggling businesses to help them reach their full potential.

If you have any requirement for additional funds or are struggling to stay afloat, get in touch with us, and we can see how we can be of assistance to you.