5 questions to ask yourself before selling your LSP

As part of our M&A Masterclass Series, Olga Blasco provides us with some key questions that all business owners should be able to answer before considering whether they are ready to sell their company.

What do I really want?

“I think it’s important to understand what you want and to be really intentional about it, intentional about what you’re going to do, because it will have a bearing on the steps that will follow,” Olga says.

“Decide what you want and where you want to be and work backwards from there in order to decide the steps.

“This will influence the people that you choose to be with you, whether you hire them as consultants or whether they are part of your team, or how you choose your lawyer, how you choose your accountant, how you choose your board.

“All these things will lead you to that conclusion that the preparation that you need to do perhaps is not just a matter of a few months – perhaps it will take you a couple of years.”

How will it affect the people around me?

“It starts by aligning your personal, professional and company goals, and aligning them for yourself, but also with your business partners – if you have business partners – and aligning them as well with your family, your spouse, in order to see what you want and what everybody else wants.

“Because sometimes you find that there are business partners that may want different things. And then what do you do?

“And if you’re a sole owner and you are the sole decision maker, you might need to align with your family, because if getting the company ready for sale will involve a lot of effort and a lot of your time and your energy, I think that you need to prepare yourself for that and you need to prepare others for that.”

Who is staying and how can I look after them?

“If you think it’s important that the members of your family that are staying are looked after, or that your key staff is looked after, after your departure, then bring it to the discussion with a buyer, even make it part of the deal structure, if that will make you feel better,” Olga says.

“Otherwise that can send your emotions spinning in all sorts of directions. And you don’t want that to interfere with the transaction.

“So talk about who’s staying, who’s going, and don’t wait until the last minute to bring up certain issues if they are really key for you, because it can cause the transaction to be delayed.”

If I leave, can the company survive?

“You need to consider if you extricate yourself from the operation, are you creating a risk? Because if the answer is yes, it means that you don’t have a proper succession plan and it may have an impact on the deal that you reach with a potential buyer.

“Because if your departure creates a risk, that will place a lot of pressure on an earn-out and closing the deal.

“Whereas if you can demonstrate that you can move on and that you have people that can run it and the buyer can incorporate that into their operation, it sends a much better message on the negotiating table.”

If I stay, am I ready to be a subordinate?

“If you are one of those sellers that say, ‘I’m going to sell the company, but I’m going to remain’, and maybe get an equity, get an important role in the buyer entity, then talk about what’s going to happen after the deal is closed,” Olga says.

“Because if you take equity and you take a share in the company and you take an important role, obviously you will have a share in what happens, but you will also have a boss.

“You will not be decision maker and you will be given objectives.

“So if you can reconcile yourself with the fact that there might be some decisions that might not go in the direction that you originally intended, then fine, then you’ve crossed that bridge and you are on the other side. Otherwise, think about it and think about what you want to do and whether you really want to stay.”

If you want to know more about this area, visit Lion People Global’s website where you can watch back our M&A Talks series of videos and fill out a questionnaire that entitles you to one hour’s free consultation on getting a LSP or language tech business ready for sale.