For many business owners the decision to sell your business is the biggest financial decision you are ever going to make. Why is it then that we have all heard of owners who was in such a rush…
to sell their company that they accept the first offer, only to later regret their decision when they learn that they could have sold it for more? If only they had applied strategic patience.
Strategic patience is the ability to give yourself enough time to stop and think before making your next move. It is that moment when negotiations get tough between yourself and the buyer, that you need the confidence to wait and get a few comparable offers in order to think and not rush your decision. This enables you to be in control of the situation so you can secure the best deal for more money.
3 steps to achieve strategic patience:
- Give yourself enough time
When it comes to selling your business effectively, preparation is key. Many owners make the mistake of leaving everything to the last minute. Instead you should be preparing and planning your exit years before you decide to put your business on the market. In order to implement strategic patience, you must have a structured timeframe that allows you to give a ‘no rush’ attitude. It’s almost counter intuitive to not want a sale to go through as quickly as possible. However, it is important during negotiations to give yourself enough time to stop, take a step back and assess whether this buyer is the right fit and whether you are happy with the deal. You might think to yourself I have slowed down this deal by rejecting it or taking time to think about it, but this is not the case. The world continues to move at a fast pace, the buyer(s) will still be interested, but you will now have the advantage .
- Have the confidence to walk away
Next you need to have confidence in your business and its worth. If the situation allows it, you should practice the term ‘walking away from the deal’. If you feel that an offer is on the low side you should be able to say; thank you very much, we’d love to do a deal with you, if we could bring these two businesses together then we would all do very well, but I am sorry the offer is just not good enough, so I will be ending the negotiations now. If you can do this with conviction, then you are applying strategic patience. You are effectively saying to the buyer that you are confident your business is worth more and that you are in no rush, which swings the pendulum back in your court. Therefore, strategic patience is about having the confidence to wait for a higher offer or for a new buyer to express interest.
- Understand your plan of action
Last but certainly not least, understanding your plan of action when it comes to selling is critical. If you don’t understand what your plan of action is, then you will not have the confidence to apply your strategic patience. What you will think is you are shooting yourself in the foot, when you are walking away from a deal. However, you need to understand the bigger picture, which is that you are actually playing your ace card rather than walking away. Once you understand the strengths of strategic patience only then can you apply the confidence to wait and in doing so, you are able to give yourself an advantage when it comes to selling your business.
Tony Vaughan, Managing Director at Vexus has first-hand experience of helping a client achieve strategic patience: “I had a client where myself and the business owner met with the potential buyer and their board of directors three times. The conversations were positive, and the companies were a good fit. Then unexpectantly the buyer decided they were no longer interested. Understandably my client starts to panic and question perhaps if we had done something wrong or whether we should go back with another offer. My client was unable to see the wood through the trees and was independently unable to apply strategic patience.
I reassured my client that they had a fantastic business, fundamentally nothing has changed and let’s not chase it. So, we went back to the buyer and said we respect your decision as we said from the beginning we are in no rush, we will carry on looking for another buyer, thank you for your time. Then 3 months later the same buyer comes back again with an offer and now we know that they genuinely want to buy the business, the pendulum swung back into our court. Long story short, we ended up getting a better deal for our client than we would have before, if we let ourselves be manipulated by the buyer and didn’t apply strategic patience.”
Ultimately if you practice giving yourself enough time, have confidence in your business and understanding your plan of action. You can apply strategic patience when selling your company which puts you in control of the situation and increases the chances of you securing a better deal and for more money.
If you have a business you’re considering selling and you want to know how strategic patience can work for you contact us here.
 ‘The zen power of simply doing nothing’ John Goulding, City A.M. https://www.cityam.com/bosses-learn-zen-power-doing-nothing/ May 29, 2019