Simon is Group Chief Operating Officer of Selbey Anderson, and has built and managed global agency teams over 30 years.

Selby Anderson, the highly successful investor in fast-growing, boutique agencies, finds and unlocks the hidden value in people, agencies and brands, and has undertaken eight acquisitions in the past three years.

This is what Simon has to say:

Listen To Your Inner Voices When Selling Your Business; They Won’t Let You Down  

For any agency owner considering selling your business, my advice is simple; ‘don’t’. That might seem strange advice coming from someone who is the COO of a company that has acquired eight agencies in the last three years so let me qualify the statement, ‘don’t unless both your head and your heart agree’. 

Retirement sales are good examples of where the seller’s head and heart are usually in agreement. If you’re unlikely to stay with the agency post-sale and it’s a good offer, then realising the value you have built up in the agency over the years makes sense.

And if the acquiring company looks like it will provide a good home for your staff and clients, then you can (and should) enjoy your sangria in the sun.

Distress sales are examples where neither the seller’s head nor heart will be happy. Distress sales are called that because they are, well, distressing and rarely succeed in the long term. 

Being forced to sell your business – sometimes because of mistakes made or errors of judgement but also because of factors beyond the seller’s control – leave these sellers feeling frustrated, angry and bewildered (usually at the speed at which their business spun out of control). None of these emotions will help the seller in settling into their new role, and if left unchecked will play a large part in their leaving.

Sales made where the head is in, but the heart is not, are as likely to fail as those where the heart is up for it but the head says no.  Either way, there’s a disconnect between the two most important internal voices that should be listened to, by every would-be vendor. 

The head says it’s a good deal but the heart’s not so sure? Don’t do it. The acquiring agency seems a great cultural fit with yours but the figures aren’t stacking up? Walk away right now! 

There’s always another deal in town and in the interim period while you’re waiting for it to emerge, you can continue to strengthen the business and tick off all those issues that will make the due diligence process go more smoothly (like having all your documentation up to date and easily accessible!).

So why do I attach so much attention to these inner voices, especially the heart? Because in my experience it was probably the heart that encouraged you set up the agency in the first place and ignoring it now would seem to be a daft thing to do. 

Take independence, for example. Many agency owners cite wanting to be their own boss as one of the primary reasons for setting up shop. Now imagine that independence being taken away from you – as it surely will if you sell the business. 

Imagine having to get your expenses signed, or your holiday request approved. Imagine having to file management reports or justify your management decisions. Its easy to think these things are a price worth paying if you achieve financial security. But they matter. And then they fester. 

One of the former owners of an agency we acquired found the increased scrutiny hard to take, post sale. He’d been used to running his shop his way for sixteen years and being answerable for his actions was – not surprisingly – alien to him. 

The problem was, as his agency’s financial performance slid, so the level of scrutiny increased; quarterly reporting became monthly and then weekly as trust broke down between us; we didn’t trust his forecasts and doubtless he didn’t trust us either, to the point that he has now left the business.

The head needs listening to, too. On paper the deal may look fantastic but tot up what you’re about to give up and it may not look so great after all. 

Those dividend payments (that are about to stop) are a lot more tax efficient than the higher rate tax code you’re about to be put on. You now may have to personally pay for your family members to stay on your private health scheme. Ditto the club or gym membership. 

Whereas before your bookkeeper would nod through your business expenses – particularly the ‘client entertainment’ cost line item – without question, the acquiring company’s finance team may not be quite so accommodating. (In fact, I’ll guarantee they won’t!). 

We should not be surprised that, when the deal is about to be done, the heart takes precedence. Think back to every major purchase decision you’ve made, be it buying a car, house or holiday and rationality will have taken a back seat at the moment of truth.

As part of his portfolio of business interests, our Chairman, Robert Senior, owns a chalet property company in France. Would-be buyers give him lists of must-haves, including nearness to shops, parking, wifi, etc. He then shows them chalets with none of these, but great views of the mountains, which they promptly buy.

My point is this.  Unless you’re a serial entrepreneur, selling your agency will only happen once. So it absolutely, positively has to feel right.  if either your head or your heart raises an objection, then don’t dismiss it. They’ll have raised it for a good reason and ignoring it won’t work. Besides, they know you well and only have your best interests at heart.

But if, having listened to both your heart and your head and they both agree, then go for it. And good luck to you.