Don’t be the “hero” of your business

If you are one of those owner-managers who are always at the forefront of their companies. The ones who are always there for their customers, suppliers and staff? Who can’t remember when they last took a holiday without checking how things were going “back at the office”.

Please Stop! You’re in serious danger of reducing the value of your business!

Owner-dependency is one of the most common reasons that private businesses don’t achieve the price they expect when the business comes up for sale and the only offers they receive are highly structured so that they can’t actually leave the business once the sale is complete.

In the best case this will be for a transitionary period to ensure a smooth handover of clients, supply chain, key workers etc. This is perfectly reasonable – why would an acquirer take even more risk by buying a business where much of the value would disappear if the owners left immediately after the deal is done?

Don’t be surprised if the deal includes an “earn out” period where a proportion of the sale consideration is held back until certain performance targets are met. However, you may no longer be in a position to influence the decisions needed to ensure those targets are met.

So the full value of the transaction will never be realised.

If you want to ensure that your business will achieve a premium sale price, it’s essential that you create a management infrastructure. Not only does that bring in new skills that may well surpass your own, and therefore add value in their own right, but it will allow you, the owner, to transition from hero to strategist; the leader of the business who will drive business success and, ultimately, receive your just financial rewards.

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