Clients invariably ask me, what is the most common reason for the sale of a business not completing? My answer is an easy one: You.
Business vendors often change their mind about selling as they draw close to completion day. But why? Why spend all that time and money embarking on something that they then subsequently abandon?
It’s a very good question and primarily amounts to this. At the start of the process it is primarily a financial transaction. The seller is looking to capitalise on the growth of their business, perhaps to retire. As the sales process moves on, it becomes more of an emotional transaction for the seller. In a sense, the business is their ‘baby’, their creation. They have identity and purpose wrapped up in running and owning their business. Now they are on the verge of losing that. Losing that reason to get up in the morning and being needed by a group of people.
It sounds strange, but over the years we have seen numerous business owners walk away from a perfectly good deal, because they can’t face the prospect of not being in charge of the business any more. It has nothing to do with the amount of money in the deal, or the exit terms, it is a soft issue about letting go of something that they have built.
At Evolution, we have sold hundreds of businesses over the past decade. Our solution to the conundrum is to identify clearly from the outset, why someone is selling the business and keep that in the forefront of their mind throughout the process. We remind our clients that there really is ‘life after sale’.