For many business owners, the decision to sell their business is the biggest financial decision they are ever going to make. Why is it then that we have all heard of owners who are in such a rush…
to sell their company they accepted the first offer, only to later regret their decision when they learned that they could have sold it for more? If only they had applied strategic patience.
Strategic patience is the ability to give yourself enough time to stop and think before making your next move. It is that moment when negotiations get tough between yourself and the buyer, and you need the confidence to wait and get a few comparable offers to think and not rush your decision. This enables you to be in control of the situation so that you can secure the best deal for more money.
3 steps to achieve strategic patience:
1. Give yourself enough time
When it comes to selling your business effectively, preparation is key. Many owners make the mistake of leaving everything to the last minute. Instead, you should be preparing and planning your exit years before you decide to put your business on the market. In order to implement strategic patience, you must first have a structured timeframe that allows you to give a ‘no rush’ attitude. It’s almost counter-intuitive to not want a sale to go through as quickly as possible. However, it is important during negotiations to give yourself enough time to stop, take a step back and assess whether this buyer is the right fit and also if you are happy with the deal. You might think to yourself I have slowed down this deal by rejecting it or taking the time to think about it, but this is not the case. The world continues to move at a fast pace, the buyer(s) will still be interested, but you will now have the advantage.
2. Have the confidence to walk away
Next, you need to have confidence in both your business and its worth. If the situation allows it, you should practice the term ‘walking away from the deal’. If you feel that an offer is on the low side you should be able to say, ‘Thank you very much, we’d love to do a deal with you, if we could bring these two businesses together then we would all do very well, but I am sorry, the offer is just not good enough, so I will be ending the negotiations now.’ If you can do this with conviction, then you will be applying strategic patience. You are effectively saying to the buyer that you are confident your business is worth more and you are in no rush, which swings the pendulum back in your court. Therefore, strategic patience is about having the confidence to wait for a higher offer or for a new buyer to express interest.
3. Understand your plan of action
Last but certainly not least, it is critical to understand your plan of action when it comes to selling. If you don’t understand what this is, then you will not have the confidence to apply your strategic patience. You will think you are shooting yourself in the foot when you walk away from a deal. However, you need to understand the bigger picture, which is that you are actually playing your ace card rather than walking away. By understanding the strengths of strategic patience, you will gain the confidence to wait and give yourself an advantage when it comes to selling your business.
Tony Vaughan, Managing Director at BuyMyBiz, has first-hand experience of helping a client achieve strategic patience: “I had a client where myself and the business owner met with the potential buyer and their board of directors three times. The conversations were positive, and the companies were a good fit. Then, unexpectantly, the buyer decided they were no longer interested. Understandably, my client started to panic and question if we had perhaps done something wrong or whether we should go back with another offer. My client was unable to see the wood for the trees and was independently unable to apply strategic patience.
“I reassured my client they had a fantastic business, that nothing had fundamentally changed and we should not chase it. So, we went back to the buyer and said we respect your decision but, as we said from the beginning, we are in no rush, we will carry on looking for another buyer, thank you for your time. Then, 3 months later, the same buyer came back again with an offer. Now we knew that they genuinely wanted to buy the business, the pendulum had swung back into our court. To cut a long story short, we ended up getting a better deal for our client than we would have before if we’d let ourselves be manipulated by the buyer and hadn’t applied strategic patience.”
Ultimately, if you practice giving yourself enough time, have confidence in your business and understand your plan of action, you can apply strategic patience when selling your company. This puts you in control of the situation and increases the chances of you securing a better deal for more money.
If you have a business you’re considering selling and you want to know how strategic patience can work for you, contact us here.