#ask-the-community
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Just starting on the process of exiting our business. Patrick mentioned there's a few second time founders in here. Any advice/red flags or mistakes I can avoid making?
Great advice & feedback!
Hi Mitesh, I sold my business in 2020 and it was a trade sale. Each business is different so will only comment on my own experience but you know your business better than anyone else.
To Brendan's points. 1. We used a broker because we weren't sure where to start and thought having a third party negotiator would be helpful to get the best price. Ultimately, they got us a few meetings but I sourced our buyer because I knew the landscape better. However, we still had to pay the broker a success fee. So, my advice is to make sure you are confident they can bring a deal to you or first start with your own research and discussions. 2. Yes, put a timeline in place but sometimes, by being open to a sale, you will find that it takes time for the news to travel to the right people. A buyer might be on a different timeline than others so my view was to be open for a whole year, then reassess. We started discussions in November, and sold in June the following year. 3. Yes, but also be prepared to understand your buyer's business and run scenarios as to how your business could integrate and create synergies with other departments. We sold our business on the idea that we could improve their business by X multiple over X years, not because our business numbers were hugely attractive. 4. Absolutely get a tax accountant right from the start. 5. Definitely have a walk away position in your mind, but also be flexible in how a deal could work out, maybe it's a lower upfront amount but bigger payments throughout the years, a tax accountant can tell you what's most advantageous. Selling a business is a negotiation, you won't get everything you want or it won't happen.
My number one piece of advice if you get to an exit/sale is to make sure that the integration into the business is extremely well thought out and planned. Executives leave, business focus changes, synergies don't always spark immediately but if you integrate quickly and efficiently, then it should work. We didn't and we became a team within the business and it was very hard to recover and get anything done with the wider business.