Selling your business is likely to be something you do only once.

The biggest challenge (and therefore the complexity with which you must grapple early on) is aligning your interests with those of all of the key members of your team.

The cynical observer will say of any business sale or purchase “buy from a fool, sell to a fool”.  In the real world you are unlikely to find a fool willing to pay you what you want for your company in a (relatively) risk free manner.

Even if you find a fool comes knocking at your door do you really want to contemplate selling to them?  At best you will pocket the money and they will then likely destroy, quite quickly, the business you have lovingly created.  Key employees will leave first, followed by the customers and then the suppliers. Alternatively, the acquirer may relocate the business, or make your team redundant, absorbing your client base into their current workload.

If you have the good fortune that your business has long term contracts with lots of customers this may be a slow process of value destruction.  Should your business operate in a highly competitive marketplace, what you toiled to create may be all gone in 6 to 12 months.

If your financial security is the be all and end all you may shrug your shoulders and observe “C’est La Vie”.

Leaving aside any moral judgements you must think through the practicalities facing you as you contemplate that sale. In a small business it is inconceivable that you will be able to execute any sale (let alone a speedy sale) without bringing key members of your team into your confidence.

Ignore perhaps the very uncomfortable conversation when you tell the team that you are contemplating a sale.  A sale remember to Mr X, a person you judge, either consciously or subconsciously, to be unfit to have the stewardship of your business.  Your team, unless they are very trusting or not worldly-wise, will sense your anxiety. Your revelation may prompt them to think about their own future.  To contemplate whether they should in fact take the next call from the head-hunter or respond to the recent approach from your competitor.

Trust takes a long time to build and is so easily lost.

When you start your conversations (even the very preliminary ones with a potential buyer) you need to be very sure that your interests and those of your key people are aligned.

You need to think this through from the perspective of the buyer too. The buyer, if being asked to pay a full price, will likely want to lock you and your team into a deal with a significant earn out component.

If your key team members do not have enough of the equity the deal may not make sense to the buyer, let alone them.  Instinctively the buyer is looking at making this deal appealing to your team as much if not more so than to you.

The simple truth is that you need to be very sure you have, at an early stage, aligned your interests with those of your key team members.

Minding the gap may mean being creative : ) .

For further information, please do not hesitate to contact an Everyman Legal Solicitor on 01993 893620 or email everyman@everymanlegal.com