Join Naomi Simson for an in-depth discussion in this video Naomi: Selling story, part of Selling Your Small Business.
- I'm very good at starting businesses. I've had lots of experience in growing them. I've acquired businesses. But I didn't get all this experience on selling a business without a few failures. In fact, that's really where I learned the most lessons. What must be at least 10 years ago, we'd incubated a business inside Red Balloon and we decided it didn't belong there. It became a distraction and a lot of energy and focus was going on to this new, fledgling business, and really it belonged elsewhere. And we found a potential purchaser, we had the beauty parade, we got the advisor, and we did the transaction.
And we were on what they call an earnout, which means we got paid 50% of the sale price after a 12-month period. The environment changed and it got swallowed into this massive organization where it got even less love and attention. And it began to decline. So when it came time to getting the earnout, they said, not only no, but you owe us money because it didn't perform as well as it should have. And we said, but you didn't do this, you didn't do this, and you lost these people, and they didn't have any of the employees left that had even started with it.
And they said, we don't care. And so what happened? We both lawyered up and on it went for years and years and years. It's probably where I learnt my hardest lessons, if not the most expensive ones. But it set me up, not just for the sale of businesses, but also in terms of acquiring businesses. Often it is the detail that will absolutely get you. This is why you make the investment in doing this course. You've really gotta understand the detail and take responsibility for it.
So, some things work in business, some things don't. I've learnt just as much from my failures as my successes, but I know the fundamental questions to ask. Your job is to ask the right questions of the right people going in to the conversation, not a year later when you're trying to get your money out. Ask those hard questions now. Be truly satisfied. Get what you can, whilst you can, when you have the power. Make sure you're truly satisfied with what you got.
- Explain how to make your business marketable.
- Determine the value of your business.
- Identify and select the right buyer.
- Build a transaction team.
- Describe how to prepare your financials.
- Finalize a contract.