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Interview: Yes! You can exit your own business

exit your own business

After Kim’s interview of myself and my business exit story, it was time to switch roles and it was my turn to become the interviewer in order to be able to share Kim’s story with you. Kim’s exit from her business was different to what would be perceived as the norm and shows that business owners, even with business partners, can change their circumstances from within and successfully exit their own business. Read on to discover the difference!

Joanna: What was your original business exit plan?

Kim: Originally I didn’t know I had the ability to exit my company. For some reason I felt as if I had to keep it until I died. I know that probably sounds silly, but I felt trapped in my business and thought people would think I was ungrateful for wanting to sell it or leave it. To further complicate things, my business partner and joint shareholder was happy to plod on for an indefinite period of time. I felt stuck. I loved my company and was very proud of what I created however I was board stiff. I wanted to do something else!

Joanna: So what triggered your desire for a business exit?

Kim: While attending the Business Growth Programme at Cranfield University I not only realised that my company was very valuable but I also learned that there were several ways for me to exit. During a dinner with my counselor he asked me what I really wanted to do with the business and my response was to ‘get rid of it or find a way to get out of it.’ It was the first time I aired my feelings but I felt as if I had nothing to lose. My counselor didn’t have a vested interested in the business so I felt free to talk openly. His response was, ‘what’s stopping you’? For the first time in years I felt as if there was a light at the end of my tunnel. Right after that conversation I was referred to a lawyer and he outlined various options.

Joanna: And how did you find the process emotionally? 

Kim: The process was the hardest thing I’ve ever done in my whole life. Even though I wanted to desperately get out of my business exiting was heart-wrenching. I cried. I screamed. I felt sane one day and insane the next. After eight years of growing a company from nothing to something I found it massively emotional. The negotiations had me up pacing through the night. My thoughts were all over the place. I wondered if I’d get the amount of money I felt I deserved. It seemed as if time stood still and things weren’t progressing fast enough. I felt anxious, nervous and afraid to even contemplate that I’d be able to get a large sum of cash and walk away. On top of all the negotiations there was also dealing with the tax authorities, lawyers and keeping things quiet from the employees. Just typing this now reminds me of how atrocious the process was for me. Furthermore, I felt as if I was going through a divorce with my business partner. We spend 8 years building something amazing and I was telling him I wanted to go my separate way.

Joanna: So what was the final outcome?

Kim: My business partner didn’t want to sell so after three ‘Considerations,’  I agreed to sell my partner 40% of my shares and grant an option for him to buy the remaining 60% of shares within a certain amount of time. The 40% payout was scheduled to come to me over 2 years with the remaining option to follow if my business partner wishes to exercise it. I was able to quit as an employee and resign from the Board of Directors. Luckily, I was able to walk away quite quickly and within three months the deal was signed and the money started to come my way. I felt that the deal struck was fair and I’m pleased to say that the relationship between me and my ex-business partner is on good terms. I’m ecstatic about the outcome and don’t have any regrets. It was the hardest thing I’ve ever done, but it was well worth it.

Joanna: In hindsight, what are the top 5 things would you have done differently, if anything?

Kim: I don’t think that I could have done anything differently other than learned how to relax more. I felt so anxious and worried when I really didn’t have to. But I suppose that applies to anything in life!

So there you are, here’s actual proof that no matter how stuck you feel as a business owner, there is a way out and you too can exit your own business. It may take someone from the outside to help you realise it but see, it is possible. If you are in a similar situation to what Kim’s was but have yet to verbalise it or do anything about it, perhaps after reading this it will spur you on and you too can exit your business and find the joy in life again.

Joanna Miller helps business owners navigate their way through the start to finish process of selling a business.  Her specialty is helping owners understand how to prepare and make the most of their business sale process to maximise their company’s value. To understand how you can sell your business quickly for the highest sales price, purchase her book, “How To Sell A Business: The #1 guide to maximising your company value and achieving a quick business sale

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Interview: Lessons Learned From Selling A UK Business

Lessons Learned in Selling a UK Business

Lessons Learned in Selling a UK BusinessWho better than to learn from one of the Sell Your Business co-owners, than Joanna! She can rightfully offer lessons learned from selling a UK business!  I interviewed Joanna in the hopes that her experience will shed some light on various factors that might be able to help you or prevent you from making mistakes.

Lessons Learned From Selling A UK Business

Kim: What was your original business exit plan?

Joanna: The original business exit plan was actually not to exit! It was to focus on getting the company to a position where it remained very profitable and could run without me at the steering wheel. I was hoping for an arrangement that would allow me to go do something else while the business continued to generate income for me and my partner (who was also the majority shareholder).

Kim: Well, that being the case, what triggered your desire for a business exit?

Joanna: I was looking for options to reap the reward of the hard work that I had put into the business. I mean, of course, I wasn’t in the business for the sake of business, but I have some personal goals too. However, it was my business partner’s sudden need to cash in and de-risk for the sake of his family that was the main reason for our deciding to sell the business. I would class our business exit as a distress sale as we allowed circumstances to dictate the sale instead of choosing our window of opportunity.

Kim: So, are you saying you didn’t have enough time to plan?

Joanna: Yes. We sort of tried to rush into the sale and discovered many things as we went along. This wasted a considerable amount of time and energy. We were looking for the buyers, preparing documents, and doing our usual business all at the same time which included market entry into the US! I think if we had given more thought to the business sale, things could have been much easier.

Kim: How did you find the process emotionally?

Joana: Exhausting and emotionally draining to the point where I couldn’t function outside of work as I only had just enough energy to keep the business and sale process going. It was a long 22 months as only 3 people (including myself) in the business out of 40 knew we were selling it. I akin it to a never-ending boxing match with unlimited rounds and varying lengths of timed rounds, feeling the effects of punches and rarely being able to punch back and control the round. I was barely dragging myself around by the time we entered the negotiation stage. It can take a lot of time and energy. There’s just no way around the stress and the long hours, I guess. I tried to keep my focus and manage my schedule, but 22 months is a long time.

Kim: What was the final outcome?

Joanna: We made an endless number of presentations and held umpteen meetings, but were frustrated every time. After the last sale attempt fell through, I left the business as an employee. I felt I had nothing else to offer and hated the business and what it had done to me. I was running on empty in terms of energy levels. My business partner stayed behind and 2 months after I left the business, it was successfully sold for millions.

Kim: In hindsight, what are the top 5 things would you have done differently, if anything?

Joanna: Very difficult to answer, as I was the minority shareholder and really had no decision making power, even though I was listened to from time-to-time. However, having seen the business sale process up close, I can say that if I was the majority shareholder, I would have:

i) Refused to enter the USA market while trying to sell at the same time as the US was a massive distraction and took a lot of my time. I would have focused on our core business and our core business only because we needed to prove that we were  over-achieving our forecast numbers and I could focus my attention on the business sale process more.

ii) Chosen to have more time to prepare to sell. This would have saved me from trying to juggle two full-time roles at the same time and truly focus on aspects of the business that would have maximised its exit value more.

iii) Not been greedy and be more aware of deal fever – I would have looked at what the realistic multiple was before short-listing offers. I would have accepted offers as they were above walk-away price tag despite the offer being made by a competitor. I should have also been wary of the big 7 figures that were being thrown around but emotions were on a roller coaster ride and energy levels were on low. Conversely, I would have walked away when the offer was lower than the walk-away price because the business’ intrinsic value was worth more and would give us a better return than say investing that cash in a different instrument e.g. stocks, property, etc.

iv) Told my senior management team that the business was for sale because I trusted them. This would have taken the pressure off myself having to personally keep the data room updated, make up a number of cover stories as to why I wanted certain information from the rest of the business, and I wouldn’t have to have hold all the technical and operational meetings with prospective buyers by myself.

v) Loved to have kept a detailed diary during the sale process as events got a little blurry and as the offers came in it was difficult to remember what happened when and why. A diary would have also helped me have an outlet for my emotions and would have been useful remembering if certain meetings went well or not.   

Well, well…You can see that business sale is treacherous territory. Joanna was frustrated by the market expansion side-by-side with the business sale, but the owner was probably trying to maximize the sale price. Patience is key, and preparedness necessary.

Kim Brown, Co-Founder of Business Wand, helps business owners navigate their way through the start to finish process of selling a business. Her specialty is to help owners cut costs and increase profits prior to sale. To understand how you can sell your business quickly for the highest sales price, purchase the book, “How To Sell A Business: The #1 guide to maximising your company value and achieving a quick business sale”

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Interview: The Management Buyout (MBO) Alternative

Looking at a Management Buyout Business Sale in Hindsight

There can be no denying the wisdom of hindsight. Looking at things that have already happened gives us important insights and learning. The paradox with the hindsight is that you cannot go back in time and fix things that went wrong. However, we can all learn from other people’s experiences when we are going to do something important in our life. Getting a university degree, setting up and running a business, and selling a business are some of the important things in life where we can gain lots from looking at other peoples’ experience.

Selling a business was a conscious choice that Sandra and her husband made. They were running a creative services agency with many blue chip companies as clients, and they ran it successfully for over thirty years. Then, one fine morning, they realised that the passion had gone out of their work. Their decision to sell the business as a management buyout and walk away to something new had “different motivators for each director”, says Sandra when asked what prompted them to exit the business. “My husband was tired of running the business for over thirty years and wanted to have some easy time. I wanted to move to something new. I had fallen out of love with the business.”

For many people, the desire to have a leisurely life or to do something new can be powerful motivators for planning a business exit. Many entrepreneurs start businesses that they are passionate about. They take pleasure and get their kicks out of what they do, and that’s why they are often successful. After you have done something for a long time, it often loses its charm. It’s the same with business. It is natural to feel that you have had enough, or that you are not interested in the business as much as you used to be. At such moments, it is best to think about a business exit before the diminishing interest takes a toll on the business performance. You know that you have arrived, and you want to celebrate your success.

“What was your original business exit plan?”, I asked Sandra.

“As major shareholders, my husband and I wanted to sell the business to the remaining two directors first. We thought it would be much simpler and easier, as the directors already knew everything about the business performance and strengths.”

Sandra and her husband were taking the obvious route to business exit and chose to take the management buyout option. However, as she would later realise, selling a business to management was much more complicated than she and her husband had initially thought. Negotiating with their directors over a long period of time turns out that it was not something they were fully prepared for.

The process was emotionally “very hard”, says Sandra. “…when business partners that you had excellent working relationship with, and previously had always pulled towards to same ends suddenly had to negotiate with each other. The uncertainty is horrible with the changing scenarios – one day the sale is on – one day the sale is off – emotional roller coaster.”

You can never afford to underestimate the complexity and the emotional stress of going through the process of a business sale. When selling the business internally, be prepared to detach emotionally from the people you’ve been working with and concentrate on a fair deal. The sale process is full of uncertainties and surprises, so be prepared. At the end of the day, you don’t want to throw away the business. You want a price that should reward you for your hard work, and leave you enough money to start whatever you are planning to start next.

“We backed out of the sale”, said Sandra when asked about the final outcome. “The sale value was not enough on its own to make us financially independent, and our next business ideas needed time to start monetising, and so in the end we realised that the sale value was simply not high enough for us. We are now looking to put long term value into the business – which we should have done years ago!”

There you have it. There’s no harm in walking away from a business sale when you feel that the price and the terms do not suit your interest and doesn’t reflect the true value of the business, why give it away to someone else if you can do more with it yourself? Though, be prepared for the repercussions that it would have, as you might not be on the same terms with your directors and other parties that you’ve been trying to sell to.

I wrapped up the interview by asking Sandra, “In hindsight, what are the things would you have done differently, if anything?”

“There’s 1 thing I would do differently. And that is to build long term value into the business. Realised that the main value of the business was US, which is useless if you want to sell. If I had my time again I would (1) develop products using the skills developed during my career and (2) Develop IP around the methodology that our business has built up, eg. by writing a book on this methodology – and create thought leadership position.”

Those reflections are interesting as more and more businesses these days look for ways to innovate and stand out for the crowd. Creating products provides another string to the business bow and can help in times of uncertainty and help smooth out those seasonal variations. On a last note, I did mention to Sandra that it wasn’t too late to take heed of her own findings and enjoy the journey of their management buyout alternative.

Joanna Miller helps business owners navigate their way through the start to finish process of selling a business.  Her specialty is helping owners understand how to prepare and make the most of their business sale process to maximise their company’s value. To understand how you can sell your business quickly for the highest sales price, purchase her book, “How To Sell A Business: The #1 guide to maximising your company value and achieving a quick business sale

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Interview: Bored Business Owner Steps Back Rather Than Sells Out

Bored Business Owner

Interview: Bored Business Owner Steps Back Rather Than Sells Out

Business owners that have become bored or frustrated with their business have a range of solutions. They can:

  • Close down the business (drastic!)
  • Pass it on to other family members
  • Put it up for sale
  • Go on a course to spur up new ideas, new connections
  • Remove themselves from the day to day running
  • Do nothing and become more and more unhappy

After twenty years of owning the successful Green Board Game Company, owner Gary Wyatt felt bored and thought the time had come to sell. Gary explained that he “fell out of love with the original idea.”

When asking Gary how he found the process emotionally he said, “I went to a “free” consultation with a particular business sales consultancy and had follow-up meetings with them.  I was not overly impressed with the consultant allocated to my business.  It seemed that they didn’t care what business I had.  It was all numbers based.  Their approach was to try and create an auction by telling everyone they could find that the business was up for sale. ‘Another brick in the wall’ sprang to mind.”

Gary went on to explain, “Emotionally, I really didn’t like this as I had spent a long time building the business.  It had my personality and love in the products and I wasn’t prepared to sell it in such an impersonal way. I had visions of the Pink Floyd video with mincemeat coming out of the production line.”

As a result, last year Gary decided against selling and instead installed a full time Managing Director. Since the transition Gary has selected the tasks he enjoys, reduced his time at the office and has successfully groomed the MD to push the company forward.  He now spends his time the way he wants and has eradicated the not-so-fun business management tasks. When asked if he’s happy with his decision, Gary comments, “I couldn’t be happier.”

Before finishing the interview, I asked Gary what he would have done differently, and this was his response:

  1. Thought through whether I really wanted to sell the business
  2. Analysed what I would do with my time more thoroughly
  3. Found a more empathetic business sales consultant
  4. Talked to people who had gone through the process
  5. Researched likely purchasers myself

Interview Takeaways

When first considering a sale, there are quite a few things to take in, and sometimes it’s easy to get caught up with one train of thought. If you’re bored, disillusioned or simply tired of managing the business there are alternatives to selling out. Aside from bringing in an MD or management team you could also consider going on a business growth course. Sometimes an injection of new ideas and new connections can recharge your enthusiasm.

Sometimes it’s a matter of paying more attention to what you enjoy and how to get back to that versus what you don’t particularly enjoy. And then take action to redress the balance. I remember times during our business growth spurt when I felt that my passion in the business was being sucked into HR and growing pain challenges and issues.  I became bored and frustrated, thinking I was stuck. I blamed it on necessary management tasks but I realised in time that while growing the business it gave me the opportunity to develop people to work in the business so I could get back to working on the business which I loved doing.

The message is this – if you’re bored or feel frustrated there are solutions! Hopefully this interview has given you some food for thought.

Joanna Miller helps business owners navigate their way through the start to finish process of selling a business.  Her specialty is helping owners understand how to prepare and make the most of their business sale process to maximise their company’s value. To understand how you can sell your business quickly for the highest sales price, purchase her book, “How To Sell A Business: The #1 guide to maximising your company value and achieving a quick business sale