It’s OK to sell your busi­ness to the high­est bid­der

Finweek English Edition - - INSIDE -

Ire­cently helped a restau­rant owner sell his busi­ness. He priced it at an at­trac­tive level and had sev­eral in­ter­ested buy­ers, one of whom seemed es­pe­cially ea­ger to take good care of the restau­rant’s em­ploy­ees and con­tinue to pro­vide the same level of food and ser­vice.

To get the deal done with this buyer, how­ever, the owner had to lower his price and de­fer more of the pay­ment than he had wanted. Ul­ti­mately, he agreed to do this be­cause he cared about his em­ploy­ees, and be­cause he had spent 30 years build­ing the restau­rant and hoped to see his legacy main­tained. But it didn’t work out that way.

Af­ter he took over the busi­ness, the new owner changed the rules of em­ploy­ment, raised prices and low­ered the qual­ity of the food. Not sur­pris­ingly, the for­mer owner felt vi­o­lated. He felt as though a prom­ise had been bro­ken.

Of course, no prom­ise had ac­tu­ally been made. But he had been led to be­lieve that his legacy would be main­tained. And now, in­stead of feel­ing proud of what he built over three decades, he feels ashamed of what the busi­ness has be­come. This is a clas­sic case of seller’s re­morse.

And that’s why I al­ways tell peo­ple to do two things when they sell a busi­ness. First, take the high­est of­fer. Sec­ond, get as far away from the busi­ness as you can, as fast you can. The un­for­tu­nate re­al­ity is that, in most in­stances, the for­mer owner is prob­a­bly go­ing to hate what the new owner does with the busi­ness. It’s bet­ter not to have un­re­al­is­tic ex­pec­ta­tions. It’s bet­ter still not to pay at­ten­tion.

When I sold my vend­ing and food ser­vice busi­ness, I had a buyer who wanted me to take a lower price be­cause he was go­ing to treat my em­ploy­ees and my cus­tomers well. I never bought the story. I had seen this com­pany buy other busi­nesses, and I had seen it in­sti­tute its own sys­tems im­me­di­ately. That’s the com­pany’s right, of course − but I wasn’t go­ing to take less money to watch it play out.

In­stead, I sold my busi­ness to a buyer who of­fered more cash. And I was glad I did. In the end, my em­ploy­ees were treated fairly. Some cus­tomers were fine with the change, and oth­ers would have liked us to stay on. The re­al­ity was that any new owner was go­ing to run the busi­ness as they saw fit. I knew this and ne­go­ti­ated a quick exit with as much cash as I could get.

Even so, sell­ing a busi­ness is a gutwrench­ing de­ci­sion. As an owner, you may have spent a life­time build­ing both the busi­ness and the re­la­tion­ships within it. You care about your em­ploy­ees, cus­tomers and ven­dors. You want to be­lieve that the buyer will treat them with the same re­spect you did. Some­times this hap­pens. More of­ten, it doesn’t. But know­ing that doesn’t make it any eas­ier. You still have to look your em­ploy­ees in the eye af­ter the sale.

But here’s the thing: if you ac­cept a lower price with the ex­pec­ta­tion that this sale is go­ing to be the ex­cep­tion, you are very likely to end up dis­ap­pointed, maybe even bit­ter. No mat­ter what they might say, the new own­ers have paid you for the busi­ness and have the right to do with it as they see fit. They are go­ing to do this no mat­ter what.

And that’s why I think you should take the money. If you’re not go­ing to like what the buyer does any­way, you might as well get the best price.

What do you think? Josh Pa­trick is a founder and prin­ci­pal at Stage 2 Plan­ning Part­ners, where he works with pri­vate busi­ness own­ers to cre­ate per­sonal and busi­ness value.

© The New York Times 2013.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.