Is now a good time to sell your business?
BCMS has been running a variety of events up and down the UK throughout 2018. The two key learnings from this year are clear. Firstly, entrepreneurs love to get the chance to talk to other entrepreneurs – particularly those who have "been there, done that" and sold up. Second, UK business owners have one big Brexit-shaped question on their minds: is now really a good time to sell?
The first point was addressed by Moonpig entrepreneur and former BBC TV Dragons' Den star Nick Jenkins – our keynote speaker at Business Sale Live!, an exclusive one-day conference for business owners at the stunning Knowsley Hall, Prescot, near Liverpool. As Nick said: "It's great to be in a room with other entrepreneurs" – as only other business owners truly understand the skill, dedication and good luck involved in making your business successful.
Nick had plenty of advice for those considering an exit strategy, drawn not just from the sale of Moonpig, but the recent BCMS-advised sale of Sublime Science, in which he was a minority investor. Nick reinforced a point he has made to us previously for BCMS' iDeal magazine: "It's a lot easier to sell a business on the way up. People don’t realise that…"
Hindsight and foresight: the right time for you
When it comes to your business, when does the way up become the way down? That of course is a question of timing. The "right time" question was handled elegantly by three former BCMS clients in a lively open Q&A session at Knowsley Hall. Taking questions directly from delegates, Jonathan Barker, Neil Needham and Mike Bailey told their business sale stories, discussing their changing circumstances, and explaining why they sold when they did. What they said they might make you think differently about the potential impact of Brexit on business sales too.
Neil Needham sold Autowindshields in 2009, in the midst of the last recession. Perhaps unexpectedly, he found there were more buyers and more interest in his business at the time – as potential acquirers were diversifying from their core sectors, and exploring new avenues for growth. Jonathan Barker – whose nationwide watch repair chain was built on footfall in high-profile retail locations – sold in 2016. The bricks-and-mortar retail market has changed dramatically since, of course, driven by the ever-increasing rise of online competition. "Sometimes a business is ready to sell but the owners don't realise," Jonathan told us. At Business Sale Live! he admitted that if he had held on to the business into 2018, the outcome might have been very different, and the level of interest lessened.
Mike Bailey's perspective was that business is cyclical, and so the timing needs to be right for you. The key is to plan ahead, work out what kind of life you want to live post-sale, and what your financial position will look like. Mike's advice is prepare effectively, and look for the tell-tale signs of acquisitions in your market. Make your business look its best: skeleton-free, and with clear growth platforms identified. If your 2019 order book is full already, and you're struggling to match customer demand, well, that may be a positive indicator for a potential acquirer.
The impact of Brexit
And as for Brexit? Well, as BCMS' Dave Rebbettes and Jonathan Dunn explained at the event, 2018 has seen a significant spike in interest from overseas acquirers in great British businesses, as evidenced by the sale of Green Hippo to a US brand and JGA to global consultancy Jensen Hughes.
Since the EU referendum in June 2016, BCMS has sold nearly 100 UK firms – with 37 sold to overseas acquirers. As well as North American acquirers, French, German, Italian, Australian and even Argentinian businesses have acquired UK clients in 2018. Market access is the key driver, and some BCMS-led deals have represented the very first foray of overseas acquirers into the UK.
UK acquirers, too, are seeking to expand their footprint – and whatever the political weather, the potential for growth is still the #1 motive for strategic acquirers.