When making plans to sell your business, it’s time for pragmatic reflection and to see things as they are – rather than how you might want them to be.
And although it’s quite natural to have your own take on your enterprise (after all, you’re the one who built the business to what it is now) you’re about to enter a marketplace which sets its own norms. At times, it’s usually a good idea to take inspiration from others who have successfully sold their business – sometimes even several businesses.
So, let’s take a look at how some household names have handled the process and what you can learn from them:
The founder of the global fashion brand, Cath Kidston, sold her majority stake in her business back in 2010.
Her original business goal, which she certainly achieved, was to create something original. But in addition, she recalls taking great pride in being able to grow the brand and develop her ideas further.
Yet, when she eventually decided to sell, she still had enough confidence in the worth of the brand to happily hand over the reins to someone else who would then continue to trade under the Cath Kidston name.
For would-be sellers, the lesson here is that one major aim of thoroughly preparing your business for sale should be to try to bring your business to the market in absolutely tip-top condition.
This will, of course, mean getting your preparation under way well before you actually want to sell. By then you’ll be selling a product in which you have every confidence.
As a ‘strong’ brand awash with potential, your company will be much easier to sell, and it’s also far more likely your inspired groundwork will be appreciated and carried forward by the new owner.
House of Fraser
Like many large department stores with a grand past, House of Fraser was finding 21st-century high-street trading somewhat tough.
Founded in Glasgow in 1849, and with its heydays long past, this ailing giant was set to close down and go into administration in mid-2018 following the collapse of talks with its creditors.
Just hours afterwards, the House of Fraser empire was sold to Mike Ashley of Sports Direct.
Ashley’s consortium, who have had a somewhat chequered career of their own, had managed to put together a viable rescue plan to save the House of Fraser name and ensure the survival of the majority of their stores.
The plan developed by Mike Ashley’s group involved a bold initiative to turn House of Fraser into the ‘Harrods of the High Street’.
Though Ashley still has to convince the doubters that his plans can be achieved, the Sports Direct approach did at least create one viable future scenario - amidst a scene of corporate failure where all seemed lost beyond hope!
The lesson we can take from this is that, when assessing the merits of potential buyers, it’s important to ensure that the person bidding for your business has the right vision and intentions.
Even if they may not seem like the ideal buyer on paper, their plans for your business could be the perfect direction for it.
Therefore, if you can successfully get over that initial hurdle, there’s every chance that such a person will build on all the hard work you have put in and run with it in order to expand and nurture your former business.
Sold for a quid!
Many times, the sale of a famous business has made headlines for the wrong reasons – usually because it has become riddled with debt.
BHS stores were sold for £1 in 2015, but are now debt-free; the Reader’s Digest brand was sold for the same figure in 2014, but still eventually went under; City Link parcels business was snapped up for a pound in 2013 and sold for over £1m two years later; and Chelsea Football Club changed hands for a quid in 1982, only to realise £140m when sold on in 2003.
The moral of these statistics is that such drastic measures were necessary because the owners had to sell on these terms to clear their debts.
So, if your business for sale is going to market because you cannot manage the financial strain, you will only find interested buyers if your asking price truly reflects the position of your business.
The bottom line here is these real-life examples illustrate just why it’s smart to listen to advice from those who have been there and made the mistakes first time around.
And if you can take that advice, then hopefully, you won’t need to make those same mistakes!
Blog by Jo Thornley, Head of Brand and Partnerships at BusinessesForSale