When you sell a business you’ve built up through blood, sweat and tears, how do you feel?
It’s a question which many entrepreneurs may be asking themselves as they contemplate a trade sale in the short-, medium- or long-term.
At BusinessCloud’s latest roundtable, several entrepreneurs revealed how they felt when they sold their business.
I drank champagne – then I cried
Lorna Davidson, CEO at redwigwam, sold Tactical Solutions to printing giant St Ives Group in 2011 but realised retirement wasn’t for her after four hours.
“I’d grown Tactical Solutions to 384 full-time staff and 800 part-time staff when I started getting approaches about selling the business, but I’d never taken them seriously. We appointed advisors and did a beauty parade. The biggest surprise to me was that people saw the value in the business that perhaps I hadn’t seen. We had six offers for the business and sold to St Ives. I went to the pub and had champagne, answered all my messages and walked through the front door of my house and cried. I was so inconsolable my family asked ‘didn’t they sign?’ I never thought I’d get to that point so I thought ‘what do I do now?’ I’d given lots of thought to getting the business to sell but I hadn’t given enough thought to me. That’s the reason why I launched redwigwam.”
My idea of stepping away went out the window
Rob Sims is the group CEO of Chorley-based Elite Group. He sold Leeds-based Nexus Telecommunications to Elite Telecom in 2017 and ended up becoming the group CEO.
“We’d been looking at an exit for the previous two years and we took the business to market. Realising the maximum financial value was important but so was finding a buyer with the right culture. In the event we sold to Matt Newing at Elite Telecom. I was 52 and I agreed to stay on to integrate the business. I’d been in the industry for 20 odd years and I fancied a change. I wanted a rest so I took three months off. The first month was about recharging my batteries mentally and physically. By the third month I was thinking ‘I’ll be back at work in three weeks, two weeks, one week from now’. I remember driving to the office on that first day and thinking ‘it’s not for me’. I thought I’ll give Matt (Newing) a call to discuss how I step away from this. Anyway by 11am I rang Matt and said ‘it’s like a light switch has been flicked on’. I could see lots of opportunities. My idea of stepping away went out the window and I became the group CEO.”
I didn’t want to sell to a VC
Sandy Lindsay MBE is the founder and chairman of Tangerine Group and put it into employee ownership.
“I set up Tangerine to prove that it was possible to run a business that was profitable and ethical. You don’t have to choose between the two. I knew that when the time came to step back from Tangerine I wanted to put it in the hands of the people, rather than selling to a VC. The idea of creating an Employee Ownership Trust absolutely sat with our values. That’s what we did in 2017. 64 per cent of the shares are owned by the trust that is the business. I’m now a minority shareholder. There was no way I was going to be able to stop working so I had a couple of non-executive directorships lined up and dropped down to three days a week at Tangerine/Juice. I can now pick and choose and that’s the biggest lifestyle change.”
I was built to be in business
Mark Mills sold cash machine business CardPoint plc in 2007 and now helps other entrepreneurs prepare their business for sale.
“I was 36 when I sold CardPoint and I did think for a while that I’d retire but some of us are built to be in business and that’s what we do. A lot of people who have sold businesses should do it again because they’ll probably do it better having done it once. It’s a good idea to have something up your sleeve afterwards. My advice to people selling is you have to do absolutely everything so the person you’re selling to won’t look stupid for buying your business.”
It felt like my world had come to an end
Lee Collins sold franchised Jaguar Land Rover dealer group Hillendale, along with a marketing company he owned and ran for 14 years, in 2014 before setting up Revilo Group.
“I had a run at selling the business before pulling out of those negotiations. We took the opportunity to spend time preparing to sell the business rather than rushing in before finally selling two years later for an additional £3m. We finally got the deal across the line just after midnight on May 2nd and almost immediately, it felt like my world had come to an end. I had a large cheque and then it hit me ‘what am I going to do now?’ The finality of the sale was an anti-climax. The money was no comparison to the high you actually get from doing the deal. That’s why I launched my new business Revilo. If I had one regret it was only taking 69 days off before I launched myself into a new business.”
I wasn’t happy about it – but it was the right decision
Elizabeth Gooch founded back office workforce optimisation software company, EG Solutions plc and sold out to US tech group Verint for £26.3m in 2017. She’s now the CEO of The Tech Growth Factory.
“When you are a listed company, or whenever you have external shareholders, the thing to realise is that it’s not just your company anymore. It belongs to all the shareholders and as the founder you have to look after the interests of all the shareholders, not just your own. Sometimes investors, particularly institutions, decide they want to sell. They’re not emotional about it. They are looking after their portfolios and their investors. It was tough for me when EG was acquired, it happened very rapidly and at the time I wasn’t happy about it. I loved the company, the customers and the people in it and it was tough adjusting to a new career. Fast forward three years and I now believe it was the right decision. It’s enabled me to use my experience to help other people.”
Selling a company is like landing a plane
Ian Masterson is the owner at Rochdale-based OBG and came close to selling his business.
“We were approached in 2007 by a potential buyer. At the time the company was growing at between 15 and 20 per cent year-on-year. Money wasn’t the main driver. I was only in my early 40s with a young family and we were looking to move house. My reaction was: ‘we’re not for sale!’ and the potential buyer said: ‘I’m going to make you an offer you can’t refuse’. We spoke to our accountants and the first thing they wanted to do was settle on what their fees would be. For their ‘fee’, the accountants had allocated me a junior member of the corporate finance team, who had only just left university. At the time M&A was booming and they claimed all other members of the team were ‘busy on big deals!’. He offered no advice whatsoever regarding what we should expect, what was acceptable, or how we should take any negotiations forward. The offer that was made was four times EBITDA, which I thought was a bit weak and didn’t show any consideration for continued growth, so I flatly refused. With hindsight, probably not my best decision, but nobody could have predicted the financial crash. We’ve since just got on with running the business and we’ve never had a year when we haven’t made a profit. Selling a company is a bit like landing a plane. If you don’t set up right you need to pull back the throttle and go around again. That’s where we are, waiting for the conditions to be right.”
The anti-climax was a real shock
Alex Craven sold his Leeds-based Bloom to Jaywing in 2018.
“I turned 40 in the year we were sold. We weren’t actually for sale. We’d grown the turnover to £4m and EBITDA was £750k. We were winning clients an agency of our size shouldn’t have been winning like Sky and X Factor. Anyway I got talking to Jaywing and they asked ‘do you want to sell?’ I said ‘we’re not for sale, you’d have to give us tomorrow’s valuation today’, thinking that would kill the conversation. They said ‘ok’ and that was the beginning of the sales process. The anti-climax of the deal was a real shock to me. I remember we did the deal on the week my father turned 70 and my wife’s friends had bought me tickets for a music festival in Wales. When I got there everyone was congratulating me ‘you’ve sold your business’ but I just wanted to sit in a corner and ask myself ‘what have I done?’”
The fit is everything
Jon Arden is the co-founder of Osprey Consulting Services, which was bought for around £3.5m by TP Group in 2020.
“We sold the business in the middle of a pandemic and I have no regrets. I worked in the aviation sector and if we hadn’t sold last year we wouldn’t have sold for five years. I was 55 at the point of sale and we’d always planned to sell from day one. We always said the money would take care of itself. The fit was everything. We turned down the highest bid because it was the wrong fit.”
I engaged advisors – but realised how much I enjoy what I do
Paul Bailey is the MD of Optimum Coatings in Morecambe. He’s sold two businesses before buying Optimum Coatings and transforming its fortunes.
“I’m an accountant by trade but I decided I wanted to acquire my own business. I’d exited a couple of companies but not for the amount of money that you retire on. I started looking for a manufacturer with a turnover of £1m and that’s how I found Optimum Coatings. It was struggling and we managed to keep it going and put a structure in place to break even. Five years ago we fundamentally changed it. It was a sub contract business and it didn’t have much of a future so we turned it into a one stop shop for manufacturing and doing the complex prescriptions. About two years ago we starting asking ourselves if we should start looking at an exit. We engaged advisors but I realised how much I enjoy what I do.”
It wasn’t like winning the lottery
Tim Fairley, managing director of Rochdale-based PDS. He co-founded the fire door manufacturer in 2003 and sold it to US-based door manufacturer Masonite International Corporation – before buying it back in 2018.
“We started in 2003 and by 2014 we were doing really well and making good profit and felt that it was the right time to think about an exit. I was 47 at the time so we engaged advisors and they came back with a valuation and went to market. The headline sale price was circa £10m. Following the sale, to receive a reward for so many years of hard work is not like winning the lottery. You’ve earned that through blood, sweat and tears. I paid myself a modest salary for years and the odd dividend here and there. We weren’t living a lavish lifestyle and that money has got to see you and your family through the rest of your life. If you’re 47 you’ve got to think ‘what am I going to do next?’ Eventually the opportunity came up to buy PDS back so we formed a consortium and it’s gone from strength to strength.”