The Enough Now study helps successful business owners understand and prepare for the impact of selling a business and allow professional advisors to better support them through the challenging process.
Having assisted hundreds of clients through the process, Clarion Wealth Planning identified that the decision to sell a business – and the emotional toll it takes on the owner both during and after the sale – is a surprisingly neglected area of research.
To address this, Clarion Wealth Planning commissioned Carter Corson Business Psychologists to undertake research into the topic. 18 entrepreneurs, identified through an experience sample, were interviewed using semi-structured interviews. The group comprised 17 men and one woman, selling businesses ranging from under £1m to over £100m turnover and in a range of sectors ranging from IT, building and engineering services, to pharmacies, care homes, logistics and printing; employing between five and over 1,000 people.
The research found that, in stark contrast to the logical reasons for starting business, the reasons for selling were often deeply emotional. Many spoke of the physical and mental pressure that led to the decision to sell, with some having a “wake-up call” of ill health or divorce.
The emotional impact on the owners was found to continue during the sale process – as owners reported feelings ranging from guilt at not being able to tell colleagues and leaving them behind, stress and conflict, to relief.
There was frustration at the slow process with the intensity of the due diligence process was commented on by almost all the owners.
Even those who subsequently describe the sale as easier than they expected, still said the actual deal process as extremely stressful. The intensity of the due diligence was commented on by almost all the owners.
Interestingly, getting the right deal came up as being more important in the end than the ‘best deal’.
A clean break was cited as a less painful way to leave for many reasons, not least for avoiding the troublesome earn-out clause.
After the sale, former owners reported a sense of relief but also pride in the business they had built up although those owners who identified strongly with the business struggled with their sense of self.
Good advice from professionals throughout the process and planning for their client’s financial future, and words of wisdom from those who have lived the experience were recognised as valuable assets in reducing the pain of the transition from business owner to former business owner.
In conclusion, the sale may be more difficult and prolonged than expected. Having someone to share the upheaval and details of the process with appears to make a significant difference to how emotional the experience is for the seller.
Guidance from professionals and advice from others who have been through a business sale themselves could prove invaluable in mitigating these issues.
More professional involvement might also be helpful after the event to support those whose sense of self was closely tied to their business.
To read the full report or for information on how we can support you through a business sale, please contact John Winstanley at firstname.lastname@example.org or call 01625 466360
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