Selling Your Business
Everyone has a succession plan, but it’s a few years away. Sound familiar?
New Zealand has a wealth of successful, privately owned businesses built through hard work and astute decisions made by passionate, committed owners. But when it comes to thinking about the right time to exit the business, many owners block out the rational instincts that have served them so well, and instead, put it off for another day.
It’s understandable. Selling a business, or a stake in it, is more than just a business or financial decision. It’s an emotional one too.
It’s about planning their succession, managing the divestment of their business, planning what they’ll do with their time and money, and how they arrange their family life. It’s about how owners will live their lives after the sale.
When it comes to selling their business, owners think through a lot of issues:
- Does the sale process end up disclosing vital information to trade competitors?
- Do they have to sell 100% or can they transition out of the business over time?
- How long will the process take?
- Is there a buyer that will understand the business as well as the owner does?
- Will a new buyer continue looking after long-standing business relationships?
- Will management and employees be looked after?
With Direct Capital, the options are much more flexible.
Owners don’t have to sell 100% of their business in one go. They can do this if they wish and Direct Capital will invest with the company’s other key management to acquire the business. But more often than not, owners prefer to transition out of the business over time – free up some capital but continue to benefit from their shareholding, reduce their time commitment but remain on the board and mentor their management team.
When a business is sold to its management, the process is much simpler and more rewarding. The sale is conducted privately so suppliers and customers don’t get unsettled through a long, public process. Management already understand the business opportunities and risks and we take a lot of comfort from their decision to invest. Management unleash their ownership potential and become highly invigorated to continue growing the business.
At Direct Capital, we view ownership change as an exciting time, a gateway for owners to map out a new direction. Many of the owners we’ve worked with say they wish they’d done it years ago!