Which type of business seller are you? Push-factor or pull-factor?

Which type of business seller are you? Push-factor or pull-factor?

Which type of business seller are you? It’s time to go. Or is it? Have you thought deeply enough about life after exit? At bizval, our business is built around empowering founders to understand the drivers of value, rather than pushing them to sell. This is an important distinction. With that in mind, this article seeks to help you think critically about why you are considering a sale of your business. Sometimes, selling just isn’t the right step. It all comes down to fully interrogating why you want to sell.

Building a business is a long, tiring road. There are many stages along that journey where you question your own sanity. Long before you even reach that point yourself, those around you have been questioning your sanity behind your back. The true friends at least ask you outright about whether you’ve lost your mind and whether this is all worth it. The rest are too scared to say anything to you about it at all.

This craziness is normal. If building a business was easy, everyone would be a successful entrepreneur. Clearly, as a business seller, it’s a lot harder than that.

After 10, 15 or even 20 years in the trenches, it’s more than understandable that you’re feeling tired. The thought of packing it all in or selling your business crosses the minds of entrepreneurs more often than they are willing to admit to. It’s a highly emotional topic. As with most difficult things to think about, taking an objective and logical approach is usually the best way.

In helping you figure out whether you are truly ready to sell your business, here are some things to think about. It starts with understanding which category of seller you are in.

 

The push-factor business seller

 

The push-factor seller: owning this business is stressful and/or irritating

Let’s start with the push factors for the decision. There are usually only two.

In the first instance, you might be very worried about the future of the business or the country. This is a valid reason to think about moving on. Sadly, a potential buyer is probably going to have the same worries. This could lead to you getting offers that are lower than you are prepared to live with. In this scenario, it’s really helpful to know what your business is worth to an experienced financial buyer. Although you might hope that a sucker comes along with a big offer, hope isn’t a strategy. It’s much more useful to be armed with the knowledge of what a “fair offer” looks like, putting you in a position to make a decision from there.

In the second and more common case, sellers are simply tired. They’ve had enough. Wen selling a business the hours are long, the pressure is relentless and they feel so trapped in the business that they don’t know where the surface is anymore. It’s like diving below the ice and desperately looking for the light coming through the hole before your air runs out. Personal health has taken a knock and relationships need work. The kids aren’t getting any younger, you know. Neither are you.

In that situation, it’s time to ask some big questions about life after exit:

  1. Are there things that you can do to address your biggest pressure points without any major changes? Sometimes, it’s just a case of priorities and mindset. It sounds really hard, but you’ll be amazed what a simple change to your sleep patterns can do. Seriously, try it!
  2. If that isn’t possible, can you address those issues by getting more help in the business? There are many families that have legacy businesses with professional management in place, collecting dividends along the way and staying involved in the business while still meeting personal and lifestyle goals.

If the answer to number 2 is no, then you have bigger problems to think about. After all, what is going to magically change about your life once you’ve sold? The reality is that getting the right manager in place should be almost as good as selling completely. If you still feel worried about owning the business with the right manager in the top job, then you’re perhaps not selling a business for personal reasons. It’s more likely that you are worried about the future in general and would prefer to de-risk yourself financially through a sale.

There’s nothing wrong with that. Just remember that to maximise the value of preparing a business for sale, the buyer wants to see that the business is independent from you. There’s no better way to prove it than by having professional management in place.

 

The pull-factor business seller

 

The pull-factor seller: owning this business is now cramping my style

Serial entrepreneurs are perhaps the biggest masochists on the planet. Not satisfied with doing this just once in their lives, they choose to do it over and over again. These are builders rather than operators. The thrill is in going from zero to one, not from one to two and especially not from nine to ten when things are stable and incremental improvement is the way forward.

Builders must step out of the way, otherwise they destroy what they have built over time. To do that, they either put managers in place or they sell the equity. Often, they do both, tapping into the valuable business experience of having engaged with buyers before and recognising what they look for.

A pull-factor seller is less emotional than a push-factor seller. The excitement lies in what is coming next, rather than what is being left behind. We would argue that a pull-factor seller is a more natural way of selling a business, as the likelihood of regret down the road is lower than for a push-factor seller.

 

business exit strategies bizval

 

Talk to us

We speak to business owners on a daily basis. We help them figure out what kind of business sellers they are, what the ideal transaction would look like and what the next steps should be. Sometimes, just getting a valuation of the business is enough for now, as this becomes part of a broader goal-setting exercise. In other cases, a bizval bootcamp is a valuable test for deal readiness. We also work with selected sellers on exit strategies and sale mandates where we believe that we can add value.

What sets us apart in the market is that we’ve built bizval around valuation and deal readiness services, rather than sale mandates and success fees. This means that our advice is centred on what is right for you, not what is right for advisors who are paid for successful deals.

If you’re ready for a refreshing conversation around your exit strategy, then contact us at bizval.

To understand the value of your business and what the impact of your strategic planning might be on the valuation, reach out to us. In addition to our standard valuation offerings, we are happy to discuss bespoke input into your forecasts and strategic plans to assist with your business roadmap.

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