Talk About Selling the Business
There may come a time when you wish to sell the business. This can become a complex and stress ridden experience, to the detriment of the business as well as its owners, if the process is not managed right. Besides the nitty-gritty of finding customers, completing a valuation and looking into the financial aspects of the deal, you also have to worry about how you will break the news to the wider stake holders. Communication regarding the sale of the business requires careful handling indeed and can actually make or break the deal. We give you a few dos and don'ts.
Take your senior management into confidence. You probably have a team of co-founders or employees at senior levels. They deserve to know first, even before you put the business up on the block. Remember that you will need their support and participation when you start "selling" your company to potential customers - taking them into confidence will go a long way towards securing their buy-in.
When you disclose your plans to senior management, be prepared to answer a few questions:
Why it is necessary to sell the business - obviously, there must be an upside, even if it is just a case of making the most of a bad situation. If you have other reasons for opting out, make sure you present your case convincingly.
What do we get - that's a question that will be on everyone's mind, especially if they expect that the business will be sold for a profit. Often, a sale bonus is awarded to senior managers, as an incentive to stay with the company until the sale is completed. Obviously, you don't want a mass exodus at the top level jeopardizing your chances of consummating the sale, so a bonus of this kind is money well spent.
Can we buy the company out - tough call! Generally, if you want to make a clean sale to a strategic buyer, it's best not to complicate the issue by offering it to the management. Be prepared to decline politely.
Next, rope in the "insiders". Ideally, you want to keep news of the sale as quiet as possible, and announce it to the larger world only when the deal looks done. However, you will need to tell a few managers or other staff, who will have to participate in the due diligence formalities. Do so as late as you possibly can, and make sure that you have non-disclosure agreements ready for them to sign.
A premature buzz on the grapevine could create unnecessary ripples. Jittery employees may leave assuming they'll get the sack; customers might hold back on orders; and should your rivals get to know, well, good luck battling the inevitable smear campaign. A non-disclosure agreement must have enough teeth to ensure that the people who need to know about the sale, are the only ones who will.
Have a contingency plan. That being said about keeping things quiet, it's nearly impossible to hide the fact that "something is going on", especially when you're huddled in lengthy closed-door meetings with a whole lot of new people in business suits! Anticipate the speculation and be prepared for it. Things you can do to minimize damage are:
Create a smokescreen. You could get through the initial stages of the sale by saying that the company is looking for new investment. It might buy you some time.
Work off-site. If it is possible, have the due diligence process conducted outside the workplace. Companies are known to hire hotel suites, or take up another office for the purpose.
Prepare your response. And when the inevitable happens, waste no time in communicating with your employees. Tell them why selling the business is a good idea, and highlight any benefits they will receive.
Save the best for last. In general, it is best to tell your customers only when the agreement is final. It is likely that most of your clients will grumble, and some may react in a knee-jerk fashion. Make the transition smooth by introducing the new owners of your business to your customers. A face to face meeting between the buyer and your customers, with your presence as facilitator can really ease the situation.
Selling a business is actually much tougher than setting one up. While you can rely on an army of experts to guide the legal, financial and statutory requirements, you need to handle the communication yourself. Take no chances with it.
Hi, I'm Akhil Shahani, a serial entrepreneur who wants to help you succeed. If you like to work smart, check out http://www.SmartEntrepreneur.net It's full of articles and resources to help you start and grow your business successfully. Please visit us & download our special "Freebie of The Month" at http://www.smartentrepreneur.net/freebie-of-the-month.html
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