When it was time for Georg Ell, CEO of Smoothwall, to sell the business, his already busy role ramped up even further. In this article, Georg explains why you can’t take your foot off the gas when you’re running a sale process and how to keep all plates spinning.
Selling your business is a high-pressure process. As well as doing everything necessary for a successful sale, you also need to keep growing. Which means hitting your numbers. How do you do this? By balancing the commercial interests of the business with the right support for the people who are making those numbers happen. Here’s how I did it when we sold Smoothwall for £75.5m and a 5.6x return.
Continually build commercial confidence
From start to end of the sale process, your primary goal is to keep the confidence of your buyers and build their conviction in your business. You’ll provide monthly profit and loss updates and a four-year plan that projects your expected growth.
You need to think carefully about the forecast you commit to. You want a trajectory that shows your business is growing nicely so buyers are interested. But your numbers also need to be achievable so you can make sure you hit the growth.
The last thing you want is for business performance to take a nosedive midway through or at the eleventh hour of the sale process. This could result in buyers getting cold feet and pulling out of the sale. Or chipping the price if they decide to go through with the purchase.
There’s more to momentum than numbers, so you’ll need to proactively manage your messaging around your business’ success. Parcelling out positive stories is a great tactic to build buyers’ confidence. So drop pieces of good news into the conversation on a weekly basis, including items like:
- A new marketing campaign that got a great response.
- A webinar that generated loads of sign-ups.
- Legislative changes that positively impact your business.
- A great piece of press.
- New customers.
A lot of this is business as usual. But you need to plan when you’re going to share the information so you provide a constant top-up of good news and build conviction in your business. Don’t share everything too quickly and then have no new good news for a period.
Get your executive team on board
When we sold Smoothwall, I did 80% of my CEO role and took on the full-time role of selling the company at the same time. Your direct reports will keep your business running, so you need to keep them updated and aligned to the sale.
Christian Hamilton, one of Tenzing’s Managing Partners told me early in the process that the fastest way to sink a sale is for business performance to flatline or drop off. So I drummed home the message that the only way we could screw the sale up was to stop running the business effectively. As a result, we never allowed our day-to-day commercial activities to be impacted.
I had half-hour daily check-ins with my executive team at the end of each day, plus an hour on Fridays. We’d use this time to make sure the business was running well with the main focus on ensuring:
- Sales were strong.
- Churn was low.
- We had a healthy sales pipeline.
The aspect that took a backseat for us was the work we’d planned to improve some of our systems. This was because the key people (particularly in Finance) were consumed by the sale process. However, this isn’t always the case for all businesses.
Keep the sale under your hat and remain visible
In general, my philosophy is to be as transparent as possible with the wider team. But I think information about a sale is extremely disruptive and distracting. And until it’s done, it can go any number of ways, so you don’t know what you can communicate until the deal’s complete.
People often tend towards paranoia in these situations. So I didn’t want to tell our entire team what was happening until I could answer the questions they’d inevitably have.
Initially, I kept the circle of people who knew about the sale small and tight. We told others only when we needed them to be involved with presentations or to provide supporting information. This included most of the finance team, who were heavily involved throughout the process.
Although there was a degree of secrecy, it was important to me to remain visible. I’ve always held a weekly all-hands meeting with the whole company, and I continued to run these sessions throughout the sale process. In part because it was important culturally for the business. But also because people would start to notice if I disappeared. These sessions also ensured our employees could continue to build the commercial success that was so important for the sale.
Be prepared to pull the trigger on change
Just because you’re undertaking a sale process doesn’t mean you should hold back on change. We kicked off a change programme in October, and our sale process started in January. We then had a big decision to make about whether to pull the plug on the reorganisation we were planning. It would have meant moving people into new roles, changing compensation plans and reporting lines, introducing new software and creating a new function. A big evolution for our business.
Someone asked me: “Should we really be making this change if we might be selling the business a couple of months later? The new owner may have their own ideas about how to run the business.” I thought about this and decided that we needed to push forward.
I didn’t want us to pump the brakes because of the sale. I felt that maintaining that internal sense of transformation and delivering on career progression promises was important.
If we’d waited until the sale was complete, the new owner would need some time to get their head around the business. And suddenly, we’d be a year down the road. Which could mean losing key people making it more challenging to deliver the growth goals our buyer expected.
Changing your business during a sale process is possible. But you need conviction that you’re doing the right thing for the right reasons. If you can explain the change to anyone that asks, it can also add to the sense that your business is moving forwards for buyers.
Bolster your team with extra support and empowerment
All your direct reports will be engaged in and busy with the sale process. Involvement will wax and wane for most people, except Finance, who will be heavily involved at every stage. I recommend boosting your finance team with external support for day-to-day work. This will free up your existing team to provide the information you need for the sale. It could also be helpful to have an operations manager role in place ahead of the sale to support administrative aspects like creating your data room.
With your top tier spending time on the sale, you’ll also need a strong management team that’s autonomous, empowered and motivated to keep your business running effectively. A culture of empowerment can’t be created overnight, so you’ll need to develop this ahead of the sale.
Keep your entire team motivated
A sales process is both exhilarating and nerve-wracking for executives. Often, they’re excited about the potential payout in the event of a deal. Then there’s the learning aspect and adrenaline of going through a sale process.
But there’s also an unknown factor around each person’s role after the sale. People will start wondering: “Will there be a role for me? Will I like the people in charge? Do I want to be part of the new organisation?”
Motivating your team is really important. Not only does it keep performance levels up, but also because nobody wants to buy a business with a management team that clearly doesn’t want to be bought. So you have to play your hand very carefully by balancing the financial incentives for your senior people with softer motivations like:
- Maintaining the company’s culture (if possible).
- Providing the business growth that leads to career development opportunities.
- Painting an exciting vision of the future in terms of product innovation and industry influence.
You could also extend transaction bonuses to key employees and your external advisors. These people are going to have a tough few months as they work to support the sale, so you want them to be on board. I also sent small gifts to our external advisors to thank them, keep them motivated and make sure they felt personally engaged with the process. This was unusual but, because it was unusual, it was also highly effective.
Keep your pedal to the metal
When you’re busy and exhausted, it’s very easy for activity outside the sale process to slip down the priority list. But that’s really dangerous. Or at least not world-class. If you want to achieve an excellent sale, you need to keep everything going. Although that means doing two jobs for a while, if you complete the sale, I can tell you that the outcome will be well worth your effort.
