Being in the privileged position of working with business owners who are embarking on their journey of exiting, selling or growing their business, I have consistently asked a very common set of questions prior to making that decision to ‘go to market’.
These questions may be packaged differently from time to time, but the underlying basis is always the same.
I figured that the most effective way to work through these questions was to write a short article on each one and will start off by listing them:
- When is the best time to sell my business?
- How do I fetch maximum value for my business?
- What is the number one thing that sells your business?
- How much time is expected of me in selling my business?
- How do I prevent staff and the market from finding out that I have gone to market?
- Why do I need to invest in selling my business?
Related: How Saleable Is Your Business?
I have realised that the last question above forms the foundation of answering most of these questions (which I will do in detail in the subsequent articles) by asking the business owner to define ‘invest’.
I have developed a matrix that I call the TREV Dial and this essentially will determine where you are in your decision-making process, and equally importantly what the best approach to market for you should be.
The TREV Dial is made up of 4 components:
Let’s look at these individually:
How much time do you still want to invest in your business? If you are at the end of your working career and are only prepared for a handover period of 24 months after which you want to retire, then it is time to get to market and push for a full exit transaction.
If you have still got 10 years ahead of you then a strategic partner could be the right call to help you grow
Your risk profile is critical in determining your decision to go to market or not. We have many clients wanting to either de-risk fully and exit their business, or wanting to reduce his/her risk profile and capitalise on some growth opportunities but not carry all of the risk themselves.
Business owners have generally carried 100% of the risk themselves with everything (including the kitchen sink) standing as security/surety for their business. The need to de-risk is a massive driver in the decision to look at some form of exit strategy.
Depending on where you are in your business and personal life cycle, your ability to tap into your internal energy tank will define, to a great extent what the right exit strategy will be for you.
The level of your personal energy works hand-in-hand with your timeline. By way of example if you have lots of time and energy, but want to de-risk, a strategic investor/partner buying up a minority shareholding may be the right solution.
Lastly your price expectation and the value you want to extract from selling some, or all, of your business will drive whether the time to sell is now or not.
If there is time to further increase the value of your business and you want to capitalise on that increased value, then now’s not the time to sell you full business.
As you can see from the TREV Dial these four variables influence the decision-making process along with the right exit strategy that you need to follow.
|Time available to you||Look for a strategic investor or BEE partner to help you grow your business||Look at a full exit|
|Your need to de-risk||Look at a full exit||Look for a strategic investor or BEE partner to help you grow your business|
|Your personal energy levels||Look for a strategic investor or BEE partner to help you grow your business||Time for a full exit|
|Propensity for value now to meet your expectation||Time for a full exit||Look for a strategic investor or BEE partner to help you grow your business|