The Trick Question You’ll Get When You’re Ready to Sell Your Business
John Warrillow, the author of the new book Built to Sell: Turn Your Business into One You Can Sell, was sitting at Gotham restaurant in New York City. His investment banker was to his right and the two men representing the company that was just about to buy his business were directly in front of him. Wine flowed. Steaks were enjoyed. Finally, the dinner plates were cleared, and his hosts asked him a question that undid all his efforts to sell his business.
"So, why do you want to sell your business?"
Muddled by the food and wine, the synapses in his brain fired slowly. He started out by saying he was tired of his business and just needed a break. His suitors raised their eyebrows. He tried to recover with a feeble description of the synergies the two companies could leverage. It was too late --they had lost interest in buying Warrillow's company.
If you decide to sell your business, someone is going to ask why you want out. It's a fair question. If your business is as good as you will say it is when trying to find an acquirer, why would you want to sell it? If you're tired and think your company's best days are behind you, why would someone else want to own it? You may feel as though you're doomed no matter what you say.
Warrillow recommends you respond to the "why" question by delivering four key messages:
For example: "We've built a great business here, and I see a bright future ahead. At the same time, I'm at a stage in my life where I'd like to create some liquidity for the value I've created so far while, at the same time, find a way to participate in some of the future upside."
There is no need to explain why you want to cash in some chips or what stage of life you think you have arrived at or how long you're willing to stay on for. Save the details for the negotiations that will come.
Nail the "why" question, says Warrilllow, and you'll cruise through an important gate on the road to selling your business.
"So, why do you want to sell your business?"
Muddled by the food and wine, the synapses in his brain fired slowly. He started out by saying he was tired of his business and just needed a break. His suitors raised their eyebrows. He tried to recover with a feeble description of the synergies the two companies could leverage. It was too late --they had lost interest in buying Warrillow's company.
If you decide to sell your business, someone is going to ask why you want out. It's a fair question. If your business is as good as you will say it is when trying to find an acquirer, why would you want to sell it? If you're tired and think your company's best days are behind you, why would someone else want to own it? You may feel as though you're doomed no matter what you say.
Warrillow recommends you respond to the "why" question by delivering four key messages:
- You've built a valuable business.
- You predict a good future for your business.
- You've reached a stage in life at which you'd like to create some liquidity.
- You're willing to stay on to help with the transition.
For example: "We've built a great business here, and I see a bright future ahead. At the same time, I'm at a stage in my life where I'd like to create some liquidity for the value I've created so far while, at the same time, find a way to participate in some of the future upside."
There is no need to explain why you want to cash in some chips or what stage of life you think you have arrived at or how long you're willing to stay on for. Save the details for the negotiations that will come.
Nail the "why" question, says Warrilllow, and you'll cruise through an important gate on the road to selling your business.