It pays to take good advice

It’s a tough decision selling a business and not one to be taken lightly. As well as the financial considerations, you should also look at the emotional issues and ensure you’ve thought them through.

Julie Anderson, business consultant at the Mackinnon Group, explains: “It is important when selling your business that you give thought to what is going to happen afterwards. If you do not want to work for strangers, then you should ensure well in advance of selling, that you are not essential to its everyday running.

“This action will minimise or possibly eliminate the handover period to the new owners. In addition to the potential emotional upheaval, it can also minimise the percentage of the final value that will be linked to future performance.”

The most important thing is to plan ahead and to ensure you are ready to sell and give up the reins. She suggests writing down your objectives, “not only the financial ones you have for selling the business, but also the things you want to achieve following the sale so that you have a focus once it is all over.”

Anderson also advises clients to consider what they will be doing once the business is sold. She says: “If you have been used to working long hours, controlling your business, it can be a considerable shock finding yourself without a meaningful daily task”.
She points out that after the sale it was often a good idea to consider taking up a new hobby, preferably one that involved getting out and about. Another good idea was to look at voluntary work, which could give a great sense of worth and also meant others benefited from your expertise.

PART TIME PROBLEMS
Frequently people who sell their businesses carry on working as consultants on a part time basis. But this has to be carefully considered as there may be clauses in the final contract preventing communication with old clients or anyone in the sector for a set period of time.

The Mackinnon Group is a fast developing corporate advisory business focused on the needs of entrepreneurial companies, their owners and managers. And providing sound advice on selling a business is just one of its fortes. It comes across all sorts of business situations and provides invaluable advice and guidance.

Take, for instance, the owner of a two-branch recruitment agency. At 55 he had been running the business for the last 20 years and was heavily involved in the operational side. But a heart attack meant taking a step back and he decided to sell the business and take it easy.

His involvement in running of the business meant that he had an ‘earn-out’ clause as part of the final contract and ended up working for the new owners for over a year. Being the key player, this was a shock and he ended up having a lot of problems adjusting to the new regime that was introduced, which made the next year all the more stressful working for someone else after working for himself.

In hindsight, he felt he would rather have left it another year having put a manager in place himself and then been able to leave as soon as the new manager took over.

Another business owner who ran a local magazine, acting as editor and manager for much of the time, put in a new editor and manager two years before selling the magazine although she was still quite heavily involved in the business.

Her planning meant that she was able to leave the business as soon as it was sold. However, having dedicated her life to the business when the time came to rest on her laurels, she was suddenly bored and became depressed.

There is no simple solution to selling a business but good advice is to hand.

Edited By Andrew Leech