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First, have the right insurance and succession plans in place
Insurance and succession plans are very often overlooked by busy entrepreneurs, but savvy ones must take care of these basics, particularly those with families relying on a business for their financial security. The illness or death of a director, other key employee, or even God forbid yourself, could lay waste to the value of a business.
You need to take proper advice to get the right illness and life cover in place, and formulate succession plans that will protect the business and your family’s income should the worst happen. An up-to-date will is another must-have document.
Make sure you’ve picked the right time
It’s never easy knowing when the time is absolutely right to sell a business as this is a combination of financial and lifestyle factors unique to you. Speaking to a professional adviser who can guide you on both wealth management and M&A matters is therefore an excellent idea.
Whether you’ve maximised the value your business could be worth is your first question and you have to answer deep questions around what is “enough” here – as well as thinking hard about the market landscape now and looking ahead.
Crucially, bear in mind that an exit should be planned 12-18 months in advance so that the sale can be structured optimally and robust financial plans put in place for the proceeds.
Learn to delegate
I’ve seen all too many business-owners collapse under the strain of trying to do everything themselves – trying to continue with day-to-day running and business-building while also doing all the legwork to prepare for a sale. Stretched too thin, things inevitably start to slip and value is destroyed.
Delegate to the experts the myriad financial, tax and legal issues involved so you can continue to focus on the business. You are the best one to ready it for sale.
Don’t have your time wasted, but equally don’t rush
Ensure that you employ a reputable and experienced agent to help broker a sale for your business. Some that are less so will waste your time with meetings with unsuitable purchasers, while the better ones will only introduce parties with serious potential.
Equally, however, don’t rush to sign with the first real contender – or the first deal on the table. You could find a purchaser with more to offer or a deal that is structured in a more advantageous way. If this is your first sale, having a seasoned M&A adviser by your side will be even more invaluable.
Think hard about the “afterlife”
Redefining your life, and even your identity, post-sale should be on your mind as early as possible. It is a very great thing to be a serial entrepreneur, but avoid rushing headlong into a new business venture just because you are at a loss what to do with your newfound time – and wealth.
When it comes to managing your money, remember that the proceeds of your business sale are too important to leave to amateurish management. It is difficult for even the most knowledgeable layperson to manage investments effectively over long periods of time so putting professional portfolio management in place is the only real route to making your business sale deliver life-long financial security for you and your family.
Take action ahead of your sale
While you may be an expert in your chosen area of business, you cannot be expected to be all-knowing when it comes to the financial, legal, contractual and investment management elements that make up a successful sale and after-strategy.
Having an M&A expert in your corner to guide a sale, and a financial adviser to take care of the proceeds, will help you maximise the value of your business sale to your life – and head off any number of potentially very costly mistakes.
If you would like to discuss your situation in confidence, please don’t hesitate to get in touch.
* Brian Spence is managing partner of S&P Investments. He has more than 35 years of experience in the UK financial services industry as an investment manager, financial planner and M&A specialist. He is a regular contributor to the UK financial press and has a deep understanding of the financial services community. Brian’s column will reflect on all the challenges and opportunities within the Vietnamese market, bringing a fresh perspective to today’s hottest issues. The columnist’s email address is brian@sandpinvestments.com.