One of our clients this week settled the sale of their business. Yep, right in the middle of our Covid-19 Stage 4 shut down.
If that wasn’t remarkable enough, this is after a protracted period spanning some 12 years. False starts, wrong suitors, bad timing, right suitor with wrong proposition, right suitor with right proposition but with wrong funders, until finally, prince charming came along.
Even then, it took our client a long time to finalise the deal and then, just as settlement was due, the world was engulfed in a pandemic. It took until this week to finally complete this phase of their succession process, which started so long ago. But it was worth the wait… they are a good match. Lots of synergies.
But the big lesson for our client was to never lose sight of their business focus. Indeed, during this whole time, the business never failed to grow and never failed to increase earnings. It may have been frustrating, but that focus was critical to the ultimate outcome.
Why did we stress the need to remain focussed all those years ago?
It came from a lesson that had been imprinted strongly on us through a referral to a troubled client who had been negotiating the sale of their business (by themselves). As is often the case, the sale process had become slow and bogged down in detail.
At the two-year milestone of negotiations, they received a call from their bank. The impact of two years of distraction had taken its toll. They were no longer profitable, fully drawn on their facilities, had no reserves of security, had breached their covenants and were now in big trouble. Their buyer disappeared fast. They almost did too.
It took a few years of hard work, but they eventually returned to profitability and in time, sold their business. Only this time, they didn’t do the negotiations themselves.
Indeed, in spite of having a great deal of in-house expertise ourselves, when it came to be managing the sale of our own former practice, we chose to outsource this work to a highly skilled specialist firm even after we received an approach to sell our practice.
We knew we would be unable to be objective and knew that we needed to remain focussed on our own business. It all worked well in the end.
So, in every Succession Plan that may involve a sale process to third parties, we strongly recommend using experienced professionals to run the process. Not only do they help the owner remain focussed on the performance of the business, they bring that black art of negotiation and presentation that is beyond most normal humans!
No matter how exciting it gets, stay focussed on your business.