The most common challenge for small businesses looking to sell up is trying continuing to run the firm while completing a deal, according to Louise Jeffreys, managing director at Gunner & Co.
Speaking at FT Adviser’s Financial Advice Forum this week (September 24), Jeffreys said small businesses have the challenge of trying to deal with their clients while also dealing with the regulator and other managers when looking to sell their business.
“Some things people perhaps wish they had known at the start of the selling process was just how much time, particularly around due diligence, and effort that takes alongside running the business,” Jeffreys said.
“Any delays that go into that process of due diligence then push the deal out. What very commonly happens is the deal goes on for longer and longer and longer, and all parties get deal fatigue.
“Then all parties start to either forget why they've come to the table, or they start asking the same questions again because they have forgotten that they've already asked them. So then it becomes inefficient.”
She said for larger businesses with a number of owners, there is the challenge of getting everyone on the same page.
“You can get some struggling or in-fighting amongst the shareholders, potentially, or just differing timeframes,” Jeffreys explained.
Jeffreys gave the example of challenged with a transaction she is dealing with at the moment.
She said: “There’s three shareholders, one of them has been waiting to sell for the last three years and has got very fed up and the other two guys want to wait another five years.
“One person's trying to push it, the other two are trying to kick it down the long grass and it becomes quite complicated.
“In those scenarios, you can see essentially divorces within partnerships and ownership of businesses, which has been a shame often when people have worked together for 20 years.”
amy.austin@ft.com
