Your business can attain rapid expansion and growth such that you may not be able to keep up with the growth as the sole owner.
When selling your business, it is good to involve professionals like lawyers and financial advisers.
There are many creative ways in which a founder can continue to participate and earn from the business even after a sale.
In 2013, a cosmetics business that began in Kariobangi in 1995 was sold for billions of shillings to a global company. This was Interconsumer Products, makers of Nice & Lovely. It was acquired by L’Oréal. The founder retained the diapers and sanitary line while the global giant acquired the beauty line.
Similarly, in 2009, a local makeup company, Suzie Beauty was sold for Sh45 million. As part of the deal, the founder was entitled to earn royalties and was hired as the company’s chief creative director.
The above are local examples of how a well-timed retirement from your business can earn you a lot of money.
How many founders have an exit strategy or a succession plan? Many happen as distress sales when the business is doing badly or when personal circumstances force the founder to retire.
Why just distress? A business can be sold when it is at its best performance to earn the founders’ good returns.
There are many reasons it may be a good time to sell your business, according to an article I read in Forbes magazine.
Sole proprietor
One reason is when the business has outgrown you. Your business can attain rapid expansion and growth such that you may not be able to keep up with the growth as the sole owner.
Experts advice such founders to consider selling a portion of their business so as to build capacity to maintain the growth momentum. This way the business is able to grow to the next level.
A second reason to sell is when you have outgrown your business. Many founders sell their businesses when they outgrow it. For example when they wish to pursue other interests.
A third reason to sell is when your industry creates partnership opportunities.
At times, a certain sector may attract investor interest due to demand. Experts advise founders to consider selling a stake when the demand is high. It is important to understand your sector and know when the market may create opportunities for a sale.
Experts counsel founders to have exit strategies way before the actual exit. It is good to know in advance when you plan to exit and how you plan to do it. This will help in having a well-structured exit.
Due diligence
Keep your business investor ready by having proper records and good governance practices. A buyer will insist on doing a due diligence of your business before they buy into it.
When selling your business, it is good to involve professionals like lawyers and financial advisers.
A negotiator will help you get the best deal. In Suzie Beauty, for example, the founder was hired as a director and continued to earn royalties for the brand she had built.
There are many creative ways in which a founder can continue to participate and earn from the business even after a sale.
It is important to have the business valued as this will enable the founder to get a fair price. A financial adviser will help in that.
The challenge some founders face is concern over the fate of employees in the event of a sale.
A sale can be conditional such that employees are shielded from resulting redundancies.
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Note: The results are not exact but very close to the actual.
