In the two years of Ashcroft and 20+ years before that, we’ve completed a variety of: management buyouts, private equity fundraising, acquisitions…and numerous company sales.
The disposals have come in all shapes and sizes, from deals valued at £1m to over £100m, from precision engineers and vets to cyber security and recruitment. Some have large factories and expensive plant and equipment; others have no physical presence at all, just a collection of consultants working remotely across the world.
Most have been profitable, although one of our largest ever deals was a loss-making software company.
What motivates owners to sell their business is as unique as the sale
For some it is genuine retirement. I’ve had a few clients selling in their 70s, but many more in their 30s and 40s; 45 is probably about average. Some just get itchy feet and are eager to explore new opportunities, others have always had an eye on the immediate lump sum generated through a sale and have planned an early exit from the beginning.
For many, it’s about de-risking: their business might be worth £10m, but at home they have a mortgage, school fees and mouths to feed, and a distinct lack of liquidity. A partial or complete sale can be life changing, and for those that have some gas left in the tank, a sale to private equity whilst retaining a significant stake has become an increasingly attractive option.
One partnership we sold recently was perhaps the most reluctant seller. They did very well out of the deal financially but prized their independence and unstinting focus on quality. However, the need to invest heavily in facilities and equipment, as well as deal with succession issues, meant that joining forces with a larger group was the best way to secure the future of the business.
The feeling that an owner has taken their business as far as they can is common, and often vendors see real benefits for the business and the employees in selling to a better invested group. Some companies just need a fresh injection of ideas or capital.
Favourable tax rates can be an added incentive to sell but are rarely the real motivating force. The tax tail doesn’t wag this particular dog.
Whatever the reason for the sale, it can be a stressful, draining, and emotional experience. Careful planning and skilful execution can certainly help to ease the pain and secure the best result, as well as engaging experts, who do the hard work on your behalf of course.