The final mile
The global context
Underpinning this statistic are some
notable regional differences. Across
the global sample, selling is uppermost
in the minds of UK entrepreneurs –
58 per cent state that this is their objective.
However, the picture is more nuanced
in the rest of Europe. It is commonly
considered in Germany (46 per cent) yet very
much a minority intention in France and
Switzerland (37 per cent each).
Similar variations can be observed
in Asia-Pacific and the Middle East.
Exit is a popular goal in both Australia
and Singapore, where nearly half of
entrepreneurs say they hope to sell one day, but it is not at all a mainstream
pathway in either Hong Kong (30 per cent)
or Mainland China (14 per cent). In the
Middle East, less than one in three
entrepreneurs will choose this route.
These results highlight that the
decision whether to exit or not is, at
least in part, a cultural one. Exiting a
business can be seen in some cultures
as a sign of success, but as a sign of
failure in others.
However, entrepreneurs are also often
influenced by the context in which
they set up their firms.
Those who bought into a business,
for example through a management
buy-in or buy-out, are most likely to have
considered their future exit from the
business, observes Russell Prior, Head of
Family Governance & Family Enterprise
Succession at HSBC Private Bank.
Those who come from a family
business background are more likely
to think about continuity and business
Meanwhile, business founders are
most likely to focus their energies
first and foremost on developing their
original business idea. If part or all of
the equity in the business is sold to a
strategic funding partner, this might
result in the opportunity or necessity
for an exit.
“There are many reasons that prompt
business owners to consider an exit,” says Mr Prior. “Strategic growth plans,
business performance, family dynamics
or poor health could all be factors
that may prompt business owners to
consider their options, which might, of
course, include an exit.”
As business owners start to consider
their options, it is important to have
a plan. This involves preparing
themselves for the sale of the business,
not just preparing the business for sale,
says Mr Prior. Planning should therefore
be considered on two levels: the
practical and the personal.
Mr Prior counsels entrepreneurs to
give serious consideration to their
personal goals right at the start of
This means really understanding their
motivations and objectives. Is a sale of
the business the right way forward?
This is particularly important for family
businesses, where such transactions
have potential implications for multiple
family members including the previous
and next generations (even if that
generation has yet to reach adulthood).
“The personal impact of a business
exit is something that entrepreneurs
often miss altogether,” he says. “Their
business may well have been their
entire life’s work. If they are going
to exit, they not only have to deal
with letting go, they have to decide
what they are going to do next and
how they are going to manage their
He adds that it is often a challenge
for entrepreneurs to think about
themselves independently from their
life as a business owner. In order to
“let go”, it is therefore important that
they set aside time and energy to
consider the emotional impact of the
sale, on them and their family.
A key part of this, says Mr Prior,
is to set in motion a personal plan
that considers the professional and
personal opportunities that will
emerge after the sale of the business.
This process can help entrepreneurs
maintain a sense of identity and
purpose, he explains.
On the business side, entrepreneurs
will then need to prepare for the
practicalities of the sale. A common
pitfall that business owners encounter
at this stage is underestimating the
time and e ort involved. It is a process
that requires considerable stamina.
Entrepreneurs will need to be prepared
to maintain their daily work routines
while identifying potential buyers, going
through the negotiations relating to
each opportunity and finally handling
the administration related to the sale.
Each of these steps takes time.
“In the same way that every exit is
unique, so is every buyer,” explains
Mr Prior. The approach will need to
be tailored for each potential buyer
which takes time, commitment and a
willingness to be flexible.
Entrepreneurs often have a vision for
how they see their business growing
in the future, but a buyer might have a
completely di erent perspective.
“For the negotiations to be successful,
the entrepreneur has to be prepared
to accept the vision of their potential
buyer,” he says. This is not always
easy. If the two sides cannot achieve
a meeting of minds, then there will be
rejection along the path toward a final
His advice is to remain focused on your
strategic goals and to accept that these
challenges are all part of the process.
Mr Prior also counsels entrepreneurs
not to underestimate the amount of
focus on the business’s administration
required to conclude a transaction.
On this point, his advice is to make
sure the business’s administration
is organised, up-to-date and ready
for review before embarking on the
process of identifying a future suitor.
In summary, selling a business is not
something to be undertaken lightly,
says Mr Prior. Anyone contemplating
a transaction must first weight up
the pros and cons fully taking into
account the needs of the business, of
themselves and their family. Failure
to do so can have deeply negative
consequences, which Mr Prior
characterises as “sellers’ remorse”.
“We do see situations where people
regret selling their business when
they did,” he says “and, of course,
they only realise this after the sale has