Selling your business doesn’t mean you stop caring about the future of your brand, employees and customers. After all the hard work you’ve put into the business, you’ll want it to continue to thrive without you. Ensuring that the business is protected during the sales process will also enhance its value to potential buyers so that you can sell at the best price.
Risks of the sales process
Putting your business up for sale is like sending out a signal to your customers, employees, competitors, and potential buyers that could have a big impact on how they view your brand. Unless the sales process is carefully managed, you might be sending out the wrong signals.
Your employees are likely to feel shocked and anxious if they haven’t been consulted before the sale goes public. Your customers might worry about how the brand will change if they aren’t reassured that you’re taking steps to ensure continuity. If your brand is damaged by these concerns or people are speculating about your reasons for selling, it could harm the business and reduce its value to potential buyers. Your competitors could take advantage of the disruption.
Controlling the message is the best way to manage these risks. Business Partnership can help you decide who, what, and when to tell so you send out the right signals to the right people.
Venture Capitalists tell all
Venture capitalists excel in this because it’s at the heart of what they do. They build a business up, making it clear to everyone along the way that a sale is the objective. But they also tell everyone how they will be included and protected through that sale, whether employees, customers, suppliers or other stakeholders.
For some SMEs, too, this is a realistic option, especially where an owner manager is retiring and has planned for it well. As for the rest, we have to decide how to approach a business sale, who to tell and when to tell them.
Open vs. confidential sales
Open sales can make use of all the available marketing channels and bring your business to the attention of more potential buyers, so it is a great option in many circumstances. Marketing widely and openly will be particularly important if there’s high demand for a business like yours and you’re hoping that competing offers will drive up the price.
For other businesses, being this up front about a sale risks opening them up as a target for their competitors to pick nervous customers from. In some cases, there may be a specific reason, like protecting intellectual property rights, as to why the sale needs to be kept quieter. A confidential sale can work well but there is a risk of missing out on the word-of-mouth referrals that can happen when people in your industry are talking about the sale.
The role of confidentiality agreements and public information
Business Partnership routinely ask potential buyers to complete confidentiality agreements for the businesses being sold. This does not give a buyer carte blanche to see every detail of information on a business though.
Even if you’re being open about the sale, there may be certain information that needs to be protected. You don’t need to worry about information that is publicly available or easy to estimate, such as the number of employees or your annual turnover. A confidentiality agreement cannot protect information which is already public.
However, there may be sensitive information you need to protect, such as new product designs or a contract you’re about to sign. It’s vital to withhold this information until absolutely necessary, in most cases until after an offer is agreed and solicitors are drawing up the legal paperwork. Things such as this are where some of the value lies in your sale. Protect it.
When to announce your decision to sell
Like fingerprints, each business sale is unique and brings together the commercial sector of operation, the relationship the owner has with employees, who the competitors are and how ruthless the market is, to name but a few. The timing of your announcement and who to include in your decisions is unique to your business but Business Partnership can work you through some scenarios to reach the right sales strategy. This includes the balance between openness and confidentiality.
The balance you’re looking for is to maintain knowledge of the sale within a small number of colleagues for as long as possible but to prevent the rumour mill from starting tall tales of failure and crisis that simply aren’t true.
Who needs to know?
If you’re an employer then it’s likely you will discuss your plans with your senior management. Your senior team will be involved in preparing information for potential buyers and if they understand why, it’s a smoother process. Telling all your employees about the sale can be difficult, especially if there’s a risk of job losses or other big changes, so limit it to who needs to know to begin with.
A business sale can take some time to conclude so whilst talking to customers and suppliers can also be important for a smooth transition, you shouldn’t do it on day one. This generally comes after an offer has been agreed at the earliest.
It’s usually best if people hear about the sale from you first, so meeting with key customers and suppliers before everything goes public can help you control the message and offer a smoother transition to the buyer.
One of the most reassuring things you can do for your employees, customers and business associates is to share some of the steps you’re taking to find a good buyer and ensure a smooth transition. The personal touch can also work wonders, so sharing some of your own emotions or hopes for the future can make people feel more positive about the change.
Let Business Partnership guide you
The best approach to selling your business will depend on its size, the sector you work in, and your reasons for selling. Business Partnership can help you create an effective sales plan, prepare for a smooth transition, and handle potentially difficult discussions with employees and other interested parties. Contact us to get expert advice on protecting your business during the sales process.