4 essential things to consider when selling your business

1. Always appoint a chief negotiator

Picture eight partners, each of them responsible for advising dozens of vendors over the years, wanting to demonstrate their finely honed negotiating skills and have their moment of glory. Many private companies have a disparate shareholder base and it is vital for the smooth running of any sale that you mandate one shareholder ? or a very small group ? to seek the best possible deal. Where shareholders have differing priorities, you should reach an agreement before embarking on the formal discussion with the purchaser. The key is to ensure frequent and clear communication between negotiator and shareholders during the process.

2. Prepare for the emotional roller coaster

Although the job of a good adviser is to prepare a client for the ups and downs and shoulder the burden of managing the transaction, no amount of coaching can really prepare you for the emotional highs and lows of selling your business. Being intimately familiar with the sale process and yet not being certain if the sale would go through can be a constant nag at the back of your mind.

3. Make sure the deal is right for the business

With large corporate vendors selling non-core subsidiaries, the priority is usually price, price and price again. However, owner-managers whose ambition and professional careers still have long way to go, getting into bed with a new partner must also offer new and exciting challenges. For instance, the highly attractive prospect of achieving a physical national presence by joining with a group of proven corporate finance professionals.

4. Chemistry is important

You can often tell if a deal is meant to happen right at the very first meeting between buyer and seller. Deals happen ? or not- because of the personal chemistry between principals. Purchasers can often come across as arrogant and overbearing. They miss the point that they have a selling job to do too. Equally, vendors can come across as defensive or coy, with unclear motives for selling. It helps when both sides see important benefits from the deal.

Written by Jeremy Furniss for the March 2002 published edition of Real Business.

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