Hi everyone,
31 years old, no kids.
I own a small business, and have received offers in the region of £750k. Plus cash in the business would give me a total equity value of around £900k on exit.
I started it 5 years ago now, with the dream that one day it could be sold. Well that day has come and I’m in a very fortunate position of having 3 companies submitting offers.
But, instead of feeling excitement, I feel a sense of dread that I’m doing the wrong thing. This business has been everything for me for 5 years. At points I have genuinely thought it would end up killing me and through the toughest days and weeks the thought of the end goal was often what kept me going. So not to be feeling a huge rush of excitement and relief right now is a surprise to me.
I have 2 options.
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Exit the business and take the money. in this situation I would invest the profits in property and lead a considerably lower stress, yet comfortable lifestyle.
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The second option is reinvest our profits and try and take it to the next level. This would invoicing recruiting, advertisement and investment in our general operations. I’d be committing to another 2 - 5 years and going back in balls deep. Obviously the risk here is we dramatically lower our profitability by doing so and fail to scale any further. I worry we may then miss what could be a once in a lifetime opportunity to sell a business for decent money.
Not really sure what I’m expecting to get by posting this, but if anyone has thoughts or has sold a business themselves, did you experience this? Did you regret it post sale? All advice appreciated.
You’re thinking about selling at one of the lowest points as far as valuations go in the past 20 years. Whoever the buyers are they are likely financing the deal and paying extremely high interest rates. If you can hold on for a couple of years and keep growing the business the multiples are going to increase and you could have a substantially different outcome.
I sold my company five years after getting my first LOI and the valuation went from just about where you are to 8 figures. It was VERY hard to turn down those initial offers, and I looked at 16 different LOIs over the years and had one deal I signed that fell through, but I’m so happy I didn’t cash out earlier on.
If you have 3 buyers chasing you now there will be more in the future and the existing ones will still be there especially if they are PE backed. Tell them you’re humbled by their offers now but you want to put your head down for 18 months and get the business to a more valuable asset. They will still be there if you hit that growth.
Also dig into the deal mechanics more. How are they financing the cash? Are you rolling over equity? How much leverage are they putting into the new company? Go listen to Built to Sell podcast and see if there are any founders on there in your vertical. I built my exit playbook off of podcasts by founders in my industry that had done podcasts talking about their exits and directly talking to them, and even did my deal with a PE firm that bought one of their companies.
If you’re desperate and miserable sell, and a million dollars is going to improve your life but you’re still going to have to go work for someone and get a job which is very hard to do after working for yourself for five years. It’s definitely not enough to retire on and you’ll be back in the rat race you left to start the company in the first place.
This is a very valid post. We absolutely have potential, our competitors can clearly see it. It’s about who is willing to invest the time and money for it. It’s not without risk, as regulations in our industry are changing as one example (but worth noting that although there would be more restrictions, this could potentially remove a lot of smaller one man bands from the competition which would help us).