“I’m only going to do this once….”
This is the most common thing a business owner will say when planning to sell their business, and that can naturally lead to a lot of anxiety that things may go wrong.
Selling a company can be one of the most significant decisions an entrepreneur can make. Whether it's due to retirement, a desire to pursue other ventures, or simply the right time to cash out, the process itself can be emotionally taxing – it’s rarely just a commercial transaction.
It also comes with a lot of questions: “What if I sell for less than the business is worth?”, “What if the buyer doesn’t do what they said they would?”, “What if I don’t get paid in full?”
While the final step will always take a leap of faith, there are things you can do before signing on the dotted line to avoid seller’s remorse.
1. Set your objectives early
Before even considering a sale, take the time to clearly define your personal and professional goals.
What do you hope to achieve through the sale of your company? Is it financial security, more time for family, or the opportunity to pursue other passions? Having a clear understanding of your objectives will help guide you through the selling process and provide a sense of purpose.
By setting objectives well in advance of the sale, you’ll have time to evaluate if they’re the right goals, time to reflect and evolve them before you are in the thick of the transaction itself.
Writing your goals down and categorising them into essentials and desirables will also give you a framework from which to compare and contrast suitors at a future date.
2. Sense check your objectives
Once you have a clear understanding of your objectives and goals, it’s essential to benchmark against the market. It’s all well and good being clear about what you want, but holding onto those objectives in a market that can’t deliver them will lead you to a dead end.
In the financial planning sector, for example, a seller will almost never receive all the payment for their business up front, and if they do, it will come with a strong discount on price. Hanging on to a goal like that will likely leave you disappointed.
Benchmarking your objectives with a partner with deep industry knowledge will ensure you are aiming for an achievable target.
3. Get the right team around you
Just as you’re the trusted adviser to your clients, so too should you have a trusted team supporting you through this once-in-a-lifetime project.
Choose partners with a deep industry knowledge, with the courage to be honest rather than deferential, and with a proven track record. That includes a consultant or broker who can prepare and deliver a go-to-market strategy in line with your objectives; an accountant who can give advice on the best deal structuring to maximise your take home consideration, and a highly experienced solicitor who will protect your needs without frustrating the deal.
4. Do your due diligence
Your buyer will undertake a significant exercise of due diligence on your firm to minimise any risk in making the purchase. So too should you. Delve into their motivations to purchase your firm, the validity of their funding and their track record in delivering deals, but also importantly the client outcomes you currently deliver to clients. Speak to references of past sellers, check trust pilot client reviews and read up about the firm in the press. Take the time to understand the areas you yourself perceive could be risks and delve into them with the buyer.
5. Negotiate with confidence
Remember that you’re in control of the negotiation process. Don't be afraid to push back on terms that don't align with your goals or to walk away from a deal if it doesn't feel right. Confidence in your worth and the value of your company can help alleviate feelings of regret later on.
In advance of meetings with your buyer, role play in your head the topics that are most likely to be negotiated. Picture yourself answering the questions calmly and confidently. By preparing in this way you will minimise emotion in the moment and will be a in a position to answer based on prior reflection.
In his book Never Split The Difference, Chris Voss (Ex-FBI hostage negotiator), emphasises the importance of remaining deferential in the negotiation, while using ‘How’ questions to uncover valuable information and guide the conversation towards a favourable outcome.
‘How’ questions foster collaboration and problem-solving by inviting the other party to contribute to the discussion. Instead of making demands or issuing ultimatums, in negotiations you can ask questions like "How can we work together to address this issue?" or "How can we find a solution that meets both of our needs?" This encourages the other party to become actively engaged in the negotiation process and promotes a more cooperative atmosphere.
6. Move on
Instead of dwelling on what could have been, shift your focus to the future. Take pride in the accomplishments of your company and the legacy you've built, but also embrace the opportunities that lie ahead. Whether it's starting a new venture, investing in other businesses, or simply enjoying retirement, channel your energy into positive endeavours that align with your goals.
In conclusion, while seller's remorse is a common experience for many entrepreneurs, it's not inevitable. By defining and sense checking your goals, doing your due diligence, negotiating with confidence and trusting your decision, you can minimise the risk of regret and approach the sale of your company with confidence.