Posted: August 26, 2016
The practical apsects of selling a business are complicated but it’s the emotional effects that often get overlooked, as Burgess Hodgson tax consultant Margaret Connolly explains
If you’re a business owner, chances are you sporadically picture the day you can finally sell up; the round-the-world cruises (hey, you may even have your own yacht!); the dream house in the Tuscan countryside; the Aston Martin parked at the end of the drive. But ask someone who has sold their business already and often the reality can be very different.
There are many complications involved in the sale of one’s business; the method of the sale (be it MBO, MBI, trade sale); the amount of consideration (are you getting good value?); and finding the right buyer, that point in the process when most people think the ‘real hard work’ begins. You will be answering query after query from your advising solicitors, tax advisers, accountants and any other professional adviser.
You will also be rushed off your feet from the moment when the idea of selling your business is a mere possibility to when it actually becomes a reality. This whirlwind experience can have an emotional impact that is often under-estimated or even ignored – until it is a tad too late.
If you can at least start to consider the likely emotional effect early on then at least you can be more prepared to deal with it. This applies to both entrepreneurs and long-term business owners. Even if your exit strategy has always been clear in your mind, and you feel like you are prepared to hand over the running of your business, the emotional effects may only be felt after the sale.
Whether you like it or not, your business has probably become inextricably part of who you are. You may have built up your business from scratch, and watched it grow into a dynamic and efficient organisation. In this sense, it is like building a family. To extend the metaphor further, selling your business may be similar to watching your children leave home.
So how can you prepare for the impact of selling your business?
1. A clear exit strategy should be in place long before you actually decide to sell. Succession planning should also be considered, arguably when you first start up your business. Leaving your business to a family member may lessen the emotional tear, but you may nevertheless still find it hard to “let go”.
2. You should discuss the sale with those closest to you. Is your business part of who you are? Can you imagine yourself not being involved with the running of the business? Friends and family will be able to help answer these questions.
3. You should ensure you are clear what you are going to do post-sale. How are you going to use the money realised? Is this business your pension, or are you aiming for bigger and better opportunities in your career? Either way, your plan should be clear in your mind to give you some emotional clarity.
Selling up could be your one opportunity to realise significant personal wealth. However, this should not be allowed to cloud your judgement. Remember that you have put your heart and soul into this business, so it will be worth more than just a number or a pile of money in the bank. The moment of selling your own business is often one that you are actually not equipped to deal with, so the impact of letting your business go is one that requires more thought than you might expect.
So if you are thinking about selling your business at some point, talk to your advisers AND your nearest and dearest about these issues. The more prepared you are to face the issues head-on, the smoother and easier the transition will be to go from full time entrepreneur/ business owner to part time “something else” .
If you’re thinking of selling your business, or for all other business enquiries, call Burgess Hodgson on 01227 454627