Selling a food business: my short story
In July 2015, we signed the Share Purchase Agreement for 100% of the shares of a small food importer and e-retailer I founded in 2012 in Helsinki, Finland. It was an exciting, happy-ending yet humbling experience. The process taught me a few lessons about negotiation, organisation and expectations management. So here’s the little story, as it might be of interest to other entrepreneurs undergoing a similar process.
Background: the motivation to sell or terminate a business
The process started from my desire to focus my energy on my research and consultancy business. While running the latter, I had launched and managed to grow, part-time and with the help of highly competent and committed people, a gourmet food business. However, my cost-of-opportunity meter was telling me to focus, and while I enjoyed the gourmet food experience, my heart was calling me in another direction. Then, my husband was offered a job in London, and this gave the final tilt: I was determined to sell or close the business ahead of leaving Finland in the summer. Sometimes events outside our control will make the final push, sometimes you just have to ensure to follow through and re-align your focus where you want it to be.
The steps once the ball gets rolling
At first, I was not even thinking to advertise the business for sale (it was such a personal enterprise, placed in a niche and, last but not least, I have a tendency, like many, to undervalue the fruits of my own efforts). Besides, I didn’t even know where to put an ad for it in Finland! Then one evening, almost as a reflex movement in my local expat community, I made a quick post in the Españoles en Finlandia Facebook group. There, against all my expectations, more than 8 different people showed signs of interest. I posted there thinking that, an SME that already has a loyal customer base, positive cash-flow and exclusive agreements with producers would be interesting to Spanish people in Finland with entrepreneurial interests or a need for self-employment.
So, when this momentum in the Spanish community started to build, I switched to selling mode:
- First, I built a thoughtful and comprehensive presentation of the company for a prospective buyer, including all the important data (marketing and sales strategies, financials, cash-flow analysis, supplier agreements, trends, background, statistics on clients, customers, suppliers, partners, tech stacks…). It is a lot to tell, even for a young SME, and it is critical that it comes in a clear, transparent and attractive way.
- I also made sure to share a bit of my vision going ahead. I did not want to sell the business on the cheap, as, in the right hands, it has a bright future. By sharing ideas, vision, experiences and expectations, you can help build the relationship with a potential buyer, getting them excited about the opportunities and not only fighting for the best price. It is not a bad strategy to share all the growth ideas and hacks you had in mind with your prospective buyer (but only when you’re farther ahead in the negotiations and have confidentiality agreements). Sharing creative and positive future opportunities helps build trust with a target buyer and will heighten the chances -all other items being in good order-, of building rapport and pre-purchase loyalty to close a better deal.
- On this matter it is of critical importance that, if you love your business and want it to thrive going forward, you really choose who you sell it to. For me this issue was solved as I took the negotiations forward only with the people I considered suitable.
- Finally, preparing myself for a last sharing phase with the buyer, I started to list and describe all the company assets and tools (this spans anything from invoicing and inventory management systems, e-commerce and warehouse process, CRM SaaS, warehousing rules and agreements, contracts with suppliers and partners, sales tactics and strategy, KPIs, newsletter software or social media tools and strategies)… everything that makes the business run. Basically, this provides a good overview of the key aspects of the operations and their cost and helps in the closing phase of the negotiation. When well documented and carefully described, this documentation is a valuable handbook for the handover process.
What did I learn?
One thing you don’t want is to be rushed. Impatience is a serious enemy in a negotiation. Another bad ally is any emotional response. If you become impatient or restless, you will weaken your position. This may be caused by many factors, including a tight calendar on your side or a patchy process of decision-making on the buyer’s side. It could be that everyone is in the process for the first time, so keeping your cool and a wide-angle view is a huge asset. This does not imply being weak, it just means:
- Don’t be in a hurry. Being impatient in this process is a natural response that should be handled with care.
- Read between the lines and map out all possible scenarios of ‘why’ your prospective buyer is taking X or Y stance at any given moment.
- Never take anything personally, but rather, as above, make your own mind-map of why your buyer could be suggesting different issues and address them with options that offer clarification and an action plan. Think of it almost as making mini case-studies, since the learning angle will already be helping the buyer to think from the driver’s seat.
- It is likely that your prospective buyer is investing their own money in your business. You have to put yourself in their skin and understand they need all the guarantees they can get and your role is to build trust in every step.
This post has no claims to being comprehensive, normative or a guide. It’s a simple comment on a personal experience selling a small, profitable and growth poised business.
Alambique Oy opened its doors with support from the Instituto de Comercio Exterior de España (ICEX) and Spain’s leading kitchenware shop and cooking school Alambique, SL.
Originally published at https://www.linkedin.com/pulse/selling-very-small-company-my-short-story-clara-llamas/
