As a business owner, you have likely invested more than money into growing your business. Most business owners have sacrificed much of their own personal life, not to mention the wider impact of missing out on precious family time, due to the demands of the business.
It’s understandable you have a personal and emotional attachment to the business.
In this article, Altius Head of Corporate Finance, Vickie Elson-Hood considers the impact of emotion when you are ready to sell your business.
Without your personal commitment, the business would not be in the position it is today. Businesses are often regarded as owners ‘extended family’, needing to be carefully nurtured to ensure they reach their true potential. They have a lifecycle which requires constant investment. Again, this is not strictly financial investment. Strategic development and innovation is required to ensure the business remains competitive in a volatile world.
It is widely accepted that it takes a certain kind of entrepreneur to start and develop a business, and another to grow and take the business to the next level.
Why is emotion important?
With many years’ experience in M&A, I know that emotional attachment to your business cannot be ignored when you are planning to sell your ‘life’s work’.
On the positive side, your attachment to your business can help you present it in a compelling manner. You know the history, the intricacies of running your business day-to-day, the challenges you have faced, and how you have overcome them.
Your emotional investment enables you to tell your story with passion and conviction. It helps you to highlight the uniqueness of your business – your USP. This emotional connection can help you build trust with potential buyers who will see you genuinely care about the future of your business, which can be an attractive selling point.
There is potential, however, for this emotional attachment to be regarded negatively by a corporate buyer in a sales process. When you are emotionally invested, inevitably it can be difficult to detach yourself. For example, you may have unrealistic expectations about the value of your business, or simply be reluctant to let go. And decisions based on your emotions rather than pure business logic can be detrimental to the sale.
It is important to approach the sale of your business with a clear commercial head and realistic expectations to enable you to negotiate effectively and make sensible decisions.
If you are too emotional going into the selling process, it can be detrimental to relationships during negotiations. It may seem obvious but it’s important to try and remain objective throughout and avoid allowing emotions to impact our judgement.
What can you do?
So, is there anything you can do to help manage your emotions when selling your business? Firstly, simply recognising and acknowledging your emotional attachment will help you be more aware of how emotions are influencing your decisions.
I would always suggest having a trusted experienced adviser or team to support you and guide you through the sales process. They can provide an objective perspective and help you make decisions based on commercial and financial benefits, rather than emotion.
Focus on the future. Look to the opportunities that the sale can bring for the business, your employees – and for you personally. The plans you have had in the back of your mind if only you had more time! Time to spend with family and loved ones, enjoying the hobbies and holidays you have looked forward to – or perhaps you want to focus on other business interests.
In conclusion
Recognising the role emotion can play in your business sale will help you use that emotion positively and minimise the potential negatives, so you can make decisions in the best interest of both yourself and the buyer. With the right mindset and approach, you can successfully sell your business and move on to the next chapter of your life.
Feel free to contact me or a member of our the Altius Corporate Finance team if you would like to understand more about the sales process or would like to discuss your current situation in confidence.
