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Have you ever wondered whether someone might buy your business? Or, does that seem too far-fetched, something only available for big businesses?
Sian Murphy is joined by business-sales lawyer Aly Young for a lively and reassuring conversation that challenges some of the assumptions owners make about what can, and cannot, be sold.
What could a buyer see in your business that you have overlooked? When should you begin thinking about an eventual exit? And how might it feel when something you have built around your own ideas, values and personality is suddenly in somebody else’s hands?
If you have assumed your business is too small, too personal or simply not the “right kind” to interest a buyer, this episode may make you think again.
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What is The Women In Business Radio Show?
Tune in for fun, inspiration and unfiltered discussions as host Sian Murphy interviews down-to-earth businesswomen sharing ideas, tactics and stories.
Regular features include recommended books, tools, lessons learned and top tips for business.
Right. Hello, and welcome into the Women in Business Radio Show. I'm Sian Murphy, and my guest in the studio today is Aly Young, who is a legal expert in business nails and the founder of AY Business Law. So welcome into the studio, Aly.
Speaker 2:Thank you very much for having me.
Speaker 1:Aly is also a VIP exhibitor at the Women in Business Big Show, which is coming up shortly. And it's not your first time at the event, is it? No. You've been there before. So we're very much looking forward to to welcoming you back.
Speaker 1:You've been on a little bit of a journey, haven't you, over the last sort of few years?
Speaker 2:Yep. I mean, we all have, haven't we? But, yeah.
Speaker 1:Yes.
Speaker 2:Definitely. We've had a lot of transformation in the last couple of years. So, yeah, really excited about it.
Speaker 1:And we're gonna be talking today about selling your business. Now I went on to I went on to my little friend Chatty PT. Oh. And I had a look at some of the I'm gonna call them statistics. One of the things that Chatty came back with was that there isn't actually an awful lot of information around about people selling their businesses.
Speaker 1:So, you know, there wasn't any, you know, x number of business do this or y number of businesses don't. But one of the things that it did come up with is that businesses with employees are more likely to be sold. And so owners with employees, 74% are more likely to plan to sell their business, and without employees, that's 35% plan to sell.
Speaker 2:Makes sense?
Speaker 1:It it does that fit in Yeah. With Yes.
Speaker 2:It certainly does. We get asked a lot what makes my business saleable. Mhmm. And there's a few things around that that I would mention and employees would be one of them. And the main reason for that is what a buyer is looking for is a business that they can just operate from
Speaker 1:day They can press almost like press a button. Yeah. We're we're going to we're going to explore in some depth I think, you know, really what one of the reasons for selling a business which seems really obvious, doesn't it? It's money. But some of the reasons people do sell, some of the reasons people don't sell, and what you need to have in place to actually have that as an exit strategy.
Speaker 2:Mhmm.
Speaker 1:And I think sometimes we talk a lot about exit strategies, but we don't always do a lot about them. I mean, know when I started my business, I wasn't thinking, hey, what am I gonna do with this when I'm, you know, when I'm going to retire? And I didn't start my business that long ago, so it wasn't as though I started my business when I was 20. Mhmm. I'd already had a full a full career before I I sort of started business.
Speaker 1:And I think that's one of the things I don't often hear people talking about is I, you know, when when you say to people, what are your goals? Very often they're talking about the goals within that business. I want to have this many customers or I want to have this many clients, I'm going to bring this product in and they have a road map. But they very very rarely say, well, I plan to sell this business in ten years time Mhmm. And do this is what I'm going to do.
Speaker 2:Yeah. I mean, for me, I was exactly the same. I and I think most women start their businesses not with a long term goal as such, but just because it's a lifestyle choice. And we might have had a really good career that we've got to the end of, or we might now have a change in circumstances, which means that we can no longer work the way that we were working. So we often start our businesses just as a lifestyle choice.
Speaker 2:Even chaps that start up businesses are so focused often on the the doing and the getting things right that nobody really thinks about the end. In the same way that lots of people don't think about writing wills, we don't really like to think about the end of the journey sometimes. But if you don't have a plan, it's like anything in life, you don't have a map. How do you know where you're going? And how do you know if you get where you want to be unless you have some targets to hit.
Speaker 2:So when people say to me, when should I start thinking about selling my business? I'd actually be quite cheeky and say, from the beginning. Because it will make a difference to how you do stuff up.
Speaker 1:Don't I my personal sense having sort of worked with with a lot of businesses is that the only people who actually start off a business thinking about they're going to be able to sell it are people who actually buy a business. Often the more what I would
Speaker 2:call sophisticated business people, maybe investors. But the usual sort of people I deal with are the owner managed businesses. You know, the people that have just had a passion for something or had circumstances that have forced them to do something and be self employed. And they yeah, they just don't. And I actually prefer to work for well, you might call them unsophisticated, but I call them the salt of the earth.
Speaker 1:Like normal
Speaker 2:people. Yes. Normal people.
Speaker 1:People who've started a business because because they want to start a business. Yeah. Because and they're doing something generally that they love doing.
Speaker 2:Yeah. Yeah.
Speaker 1:I Of of the people that I've met who have bought a business, as in that they've they've bought a business that somebody's selling or they bought a franchise, they haven't They've made a they've made a financial and logical business decision. They haven't gone, I just love doing this. I want to work with these sorts of people, and this is what I want to happen.
Speaker 2:I'm lucky enough to be able to choose my clients these days, and I choose to work with those people who are a little bit more heart led. And that's not to be dismissive of people that are more technical and logical with their business brains.
Speaker 1:Well, no. It's who you like. It's who where you get your joy, isn't Absolutely.
Speaker 2:That's where my purpose sort of is fulfilled when I work with those owners who come to me and say, for whatever reason, they're looking for my advice. Often that's because they've already got a buyer in place. Oh. That's sort of okay in that obviously we can just pick up the legal paperwork at that point. But sometimes when you've just sat and had what I call a opportunistic buyer knock on your door, because people don't do the thing that you're talking about, which is consciously walk into that process, that opportunistic buying process becomes a bit sticky in places.
Speaker 2:So, yeah, my passion is to go out and talk to business owners, ordinary, sensible, emotional, heart led, hard working business owners and say to them, can you just think about this, like sooner rather than later? Ideally at the beginning, but nobody really No. Was gonna do that. But at some point, when the business is going quite well, it's really good to float up and go, okay, right, what's what's the goal here? Because it will change the decisions that you make in how you manage your business.
Speaker 2:That
Speaker 1:brings me on to a question I did have and I wasn't going to ask it now, but I think it fits in quite nicely. And it's something that struck me when I set up a community interest company. Intellectually, I knew what that was all about. So the Women in Business big show and the radio show was going to run through a community interest company. And I I I got that.
Speaker 1:Now, it's not necessarily mine. It belongs to it's a community interest company. I, you know, when I decide to close it, it closes and all of that sort of thing and and that's it. And there's a board of people who potentially can make decisions about what I what I do and don't do. I totally got that intellectually and then I sat down and actually thought about it and went, hang on a minute.
Speaker 1:Oh no, this is mine, isn't it? No, I did this. I set it up. Oh no, it's I'm not even getting somebody else making a decision, you know. I have my own values, this is what this this is about.
Speaker 1:It's about my values and no and it's my brand.
Speaker 2:Mhmm.
Speaker 1:And I was really quite surprised about how possessive I found I was about it. And I'm now having to find a different way of managing that community interest company side of things. But I can also see that happening exactly the same from the sales side of things. And that it doesn't hit people's first up. So for me, I went all through the legal process, did all of that, set it all up legally, know, board members, all of that, and then it hit me.
Speaker 1:Something happened, I can't remember what it was, and I and I sat down and thought about the reality of this. Mhmm. Is it like that sometimes for business owners who've built up a heart led business? Yeah. They go through all this.
Speaker 1:Oh, there's excitement of this. Oh, I can do this. And somebody's offered me that. And then suddenly, oh, hang on a minute. Well, I don't agree with what you're gonna be doing, but oh, it's not mine.
Speaker 1:So you can sort of do what you want.
Speaker 2:Yeah. And I mean, heart led, I I use that those words. So I get I get that you've given those back to me now. But I I suppose they're not all like, you know, with their heart on their sleeve.
Speaker 1:Yeah.
Speaker 2:It's just that they care. They've been inspired to do something or have had have been forced to do something. And then in doing that thing, they love what they do. Maybe not so good at business, they have to learn that as we go, as they go. But there is 100% an emotional attachment often.
Speaker 2:And that can be tricky when it comes to managing a business and then thinking about exit. Because inevitably, by leaving that business and selling it to somebody else, someone else is gonna make those decisions. Yes. Most of my clients care about a couple of things. So they care about getting their money, that's really important.
Speaker 2:Yes. Yeah. And that's fine because there's ways we can
Speaker 1:That's help what you're for. And
Speaker 2:that's priority number one. And getting as much money as you can. Yeah. So some of the things that annoy me sometimes is when you've had that opportunistic buyer come along to somebody who's got carried away then and said, someone wants to buy my business, I'm gonna go with that. They haven't actually really thought about value.
Speaker 2:So Oh. Sometimes my concern is that perhaps they could have got more for their business than just this person that knocked on the door. So that's an element that I like people to look at earlier on. But then they also care about what happens to their staff, if there are staff. They care about what happens to their clients, they care what happens to their suppliers, they care about their brand and the service that's been so associated with them.
Speaker 2:And that is a really emotional element that I enjoy helping with because my job is unfortunately to sort of help them come to terms with the fact that no matter what we might agree with any potential go, buyer
Speaker 1:don't they?
Speaker 2:That buyer will do what they want with that business afterwards. There's very little we can do.
Speaker 1:And it could and it could well be that they're gonna make it a lot leaner.
Speaker 2:Absolutely. Especially if you're selling to investors which most buyers are.
Speaker 1:Yeah. To make it more profitable. Yep. And that that could be changing suppliers Yeah. Cutting staff.
Speaker 1:It could Closing premises, losing people, moving assets. All of things.
Speaker 2:Sorts of stuff.
Speaker 1:So there is there is an there is a degree of letting go Mhmm. And from from my point of view, it's not quite so I'm almost at selling, but sort of buying into this community interest company side of things. I wish I'd have got that before I got too far down. But like and it hit me, it was really weird. It was like, woof.
Speaker 2:Yeah. Yeah. Yeah. No. There's a there's a massive journey that a seller has to go on.
Speaker 2:And the sooner they can start that, like you said, it it you you didn't find that experience when you were setting it up, but you did find it quite quickly and that's great because you've already had to make that adjustment. But because sellers have usually had quite a lot of autonomy and freedom, They don't and because a lot of them don't think about selling, they don't start that emotional adjustment until they start talking to the likes of me. Yes. Yeah. And I just wish people were doing that, like, sooner.
Speaker 2:Not not to say I don't want them to have, you know, feelings about their business. You know, you can't stop how you feel about anything. And having feelings that drive you can make you very, very successful. So it's not about getting rid of those feelings. Those feelings can make you really, really, you know, develop a fantastically unique business that is reflecting all of your values and all of the things that you believe in, and that's all absolutely fine.
Speaker 2:But if ultimately you want to retire and slow down and you don't wanna work until the day you die, that's sort of how I bring it out to people. I say, you know, you're gonna stay in this business until you die? Is that really what you want? And if if if it is, then okay, that's fine. Some people are happy with that.
Speaker 2:But for me, I like people to feel like they've got the option, you know. And you know, we all have other hopes and dreams that we might like to fulfill. If you can sell your business and get some decent money for it, and then go off and and do some of your bucket list. How amazing is that?
Speaker 1:So talking about sort of getting some money from it, how what are the sort of elements that go into valuing a business? What are the things you need to think about?
Speaker 2:So if I was a valuer, now it would get very boring because there's about 12 different valuation techniques and I am not a valuer. So one, although I sort of understand that, I'm not gonna give you those. If you want to know roughly what your business is worth, it's usually gonna be a multiple of your profit. That's the most normal way of approaching valuation. So you would need to look in your business and work out EBITDA.
Speaker 2:People use that terminology a lot and don't always really know what it means. It means earnings before interest, taxation and depreciation and amortization. Forget all that. Basically, what you need to do is look at the past, say, three to five years of your business. Take out anything that would be say unusual.
Speaker 2:So if you've had a one off big expenditure on some new equipment or say similarly if you've had you know a big influx of cash that you weren't expecting, you take that out and what you're looking for is a sort of average sort of normal
Speaker 1:level To trot in
Speaker 2:a lot. Of profit. Yeah. That you can expect that to continue on a fairly regular basis. So first of all, that's the first thing you have to identify, a realistic figure for your EBITDA.
Speaker 2:And then you would look inside your industry, and you probably will find stuff on Copilot or ChatGBT Mhmm. Or Claude actually, which is very good for legal stuff by the way. And then you look in your industry and you're looking for a multiple. So that multiple will be different which sometimes depends on industry. So some industries have a much higher level of a multiple.
Speaker 2:So tech for example, software companies, things like that. They'll have a higher multiple and the reason for that is because they are seen to be highly profitable and likely to continue because they've got assets that are sort of fairly stable, albeit they might be fast growing, that's only going to go in one way usually up. So you're looking at industry multiples which can be the highest I've seen in the thirty years that I've done is about ten, which is pretty damn good. But for a business like mine, which is more based on me, you're gonna be looking at maybe one and a half, two times. And then if you're not sure, maybe plant for somewhere in the middle.
Speaker 2:That multiple is supposed to reflect how many years the buyer can expect that profit to probably safely continue.
Speaker 1:Let's So let's look at sorry.
Speaker 2:Yeah. No, fine. Go ahead.
Speaker 1:But I just wanted to sort of get this this point in because what what we've done here is sort of identify quite two quite different
Speaker 2:Mhmm.
Speaker 1:Types of businesses. So one of them is if we just say the the the tech industry, so they're selling software Yeah. If you like.
Speaker 2:Or manufacturing or construction, things like that where you've got, you know, a lot of growth and a lot of stability. Oh, I must say construction. Construction might not be that stable. It does fluctuate depending on what's happening
Speaker 1:I was looking at that also when you mentioned yourself is the distance from the consumer. Yeah. The distance from the client, if you like. I think with software looking at, you know, sort of multiples multiples of sales and not necessarily a reliance on one person heading it up. Because there'll be a team of developers.
Speaker 1:Yeah. So more than one person is likely
Speaker 2:to hold the the skill set there. The more the owner is less the more the less the business is dependent on the owner, the higher the value of the business.
Speaker 1:You see, in speaking to the owner, you know, as a company as a as a customer, I'm highly unlikely to speak to the owner on time. So the owner's charisma or lack of charisma Is it right? Or or or or their personality largely sort of as far as my buying decision doesn't really come into it. Yeah. Whereas if I'm looking to sell a business Yeah.
Speaker 1:Or I need some legal support there, it's you, isn't it?
Speaker 2:I'm buying you. Yeah. And my business is also not very valuable because I don't have what's called usually repeat income. So when I sell a business Okay. That's it.
Speaker 2:The owners sailed off into the sunset
Speaker 1:And they and they've left. Thank you very much.
Speaker 2:Yeah. I do have referrers who repeatedly work refer work to me. So there is some element of repetitive
Speaker 1:But that's slightly different, isn't it? That's slightly different than a monthly
Speaker 2:They were referring retainer of me again. So it's back to usually how involved the business owner is. The higher the the multiple will be higher if the business owner is slightly away from everything.
Speaker 1:So is it is it still possible to sell a business like yours where you are very much, you are that person that is, you know, I come to I come to you to help for help in selling my business. I'm buying you
Speaker 2:Yeah.
Speaker 1:Aren't I?
Speaker 2:It's harder. It's much harder.
Speaker 1:And it is still doable.
Speaker 2:Well, so what I have created in my business now is I've created a bit more of a system and a process, and I have more people helping me. They're not employed by me, but they are a team that can deliver the service. And I've segmented bits of what I do and delegated that out. So you could buy my business knowing that you just have to replace me And that is just a lawyer who's had maybe ten to fifteen years experience.
Speaker 1:Who is that all?
Speaker 2:Well, I'm I'm thirty years experience now, but someone who's got ten or fifteen years could do it. So if I was thinking of selling the goodwill in my business that's associated with a y business law, and you knew me originally as Aly Young Law Limited. Well, I changed my business name about four years ago for this very reason, Sian, because I thought I can't be out there trying to tell people, you know, this is what you need to do if you wanna think about selling your business and not apply that to myself. So we branded to make it less about Aly Young Law and more and more of a generic term. But don't forget, Malone.
Speaker 2:Jo Malone is one of my favorite examples, you know, she sold her candles and flav fragrances business for many many multiples even though it's all based around her own name. And then she had the strange irony of that she wasn't able to use her name for a little while. And then she went and set up another business using bits of her name. I think it was Jo Does Something or other. And the people that bought Joan Malone actually litigated against her and stopped her from
Speaker 1:doing it. That that happened to Kate Spade as well.
Speaker 2:Oh, yes. Yes. It does happen.
Speaker 1:When she sold she sold her name.
Speaker 2:Yeah. So it's really hard. Now I wanna give people like really clear, you know, parameters so they could take a look inside their business and go, okay, what what might my business be worth? So very simply, work out your average profit for the last three to five years and then have a little dig around in some of the AI tools to see what industries are getting what type of multiple at the moment. As you pointed out earlier Sian, the real challenge with some of this stuff is it's a lot of it's hidden information, so there's not really publicly available information, not like Right Move where you can go on and have a look and
Speaker 1:see there's collection businesses you could go, oh, that's sold for this. Exactly. So,
Speaker 2:you know, it's I like to try and make things really simple and I don't think it's any harm to do a back of the don't know. You're not allowed to say five packet anymore, are you? But, you know, a very rough calculation. We've said that. Very rough calculation.
Speaker 2:But again, and I and I say that because I don't want you to undervalue and I don't want you to be unrealistic, but I also want you to understand one thing in that it's only going be worth what someone's prepared to pay for it.
Speaker 1:So you've
Speaker 2:got to balance all of that.
Speaker 1:But you know, I I think that's I think this is just excellent advice because you you One of the things it tells me is that you have absolutely know your numbers.
Speaker 2:Absolutely.
Speaker 1:So, you know, one of the things as somebody who trains bookkeepers and all of that sort of thing is I see so many businesses and for years I was one of them, where I'm so busy doing everything or getting the receipts in and doing this and doing the tax returns and making sure that all of that happens. And it's all driven towards that. And now when you look at it, actually there is another there is a proper reason for knowing those numbers. Mhmm. And it's because it's what is what drives your business growth.
Speaker 2:It's a bottom line. Yeah. It's what's left at the end.
Speaker 1:But but also knowing, especially if you're coming to sell as well, if you wanna maximize your profit, and I may be talking total rubbish here very often I'm. No. Not. But, you know, if if you're if you're coming to sell and you're looking at your business now and you're thinking in five years time, I'd like to sell and what the sale price is going to be a multiplier of your profit, you need to start looking at your different income streams now, don't you?
Speaker 2:Absolutely. You've got to maximise your profit.
Speaker 1:May well find that your your overall profit, it's going to be a a sum, if you like, of everything, isn't it? A a balance of everything. But if you've got something in your in your income stream that's losing money.
Speaker 2:You need to get rid of it. You need
Speaker 1:you need yeah. You need to get rid of it and start looking at your, you know, your top profit generators Yeah. And focusing on those Yeah. Now.
Speaker 2:Absolutely. And keeping costs under control. Yeah. You know? And and again, I do my P and L on a monthly basis.
Speaker 2:I I'm quite obsessive over it. I'm not sure that you have to do it on a monthly basis, but you know, certainly every quarter you really need to be looking at your your numbers. You know, it's not enough to wait till you get your accounts at the end of the financial year to look back and say oh I made
Speaker 1:profit And I think that's very often, sorry if you're listening folks, I've got a squeaky chair. It's been one of those days and I'm trying not to move my squeaky chair, but now I'm too far from the microphone. So now you've got that as well. We're a professional So show I would do We're real. Pack it.
Speaker 1:We're real.
Speaker 2:Yeah. So I might be throw throwing a little bit of a spanner in the works here, but having asked you all to think about profit, and yes, profit is really really important. I am gonna throw a couple of other sort of little nuggets in there, which are which are great information to have because it's very positive information I'm about to give. So sometimes people want to buy a business for one particular asset. So it might be that you have, I don't know, a particular piece of software or you have a know how, a certain way of doing something.
Speaker 2:Okay. Or you might have a client list that you might not actually be making as much money out of, but someone else could take that client
Speaker 1:list Can
Speaker 2:see the value in it. And could absorb it into their business and make more money out of it. So profit is very important for anybody running a business, when you're running it and when you're thinking of selling it. And I really urge people like you said to get a grip on your numbers. But I don't want anybody who's sort of really fearful and sort of going so I've had a client at the moment who who's at the end of really at the end of their tether.
Speaker 2:They have a very nice client list, but they're done with delivering service to it. They aren't making a lot of profit because they've been ill and they've struggled over the last few years.
Speaker 1:And it's their bum on the seat is the one that does it. So if their bum isn't on the seat
Speaker 2:On the face of it, that she doesn't have much to sell. But I believe that her client list could be absorbed by a bigger practice doing what she's doing. And therefore I believe that, and I know in the sector that we're talking about which is physiotherapy, there's a huge appetite to buy physiotherapy businesses. And the reason for that is because we all know the NHS is struggling and therefore actually some of the NHS contracts are now going to private physiotherapists. So there is always anomalies where you may find that you still have something worth selling even if you're not as profitable as maybe you'd like to be or a buyer would like you to be.
Speaker 2:So again, it's such a complex area, but I will always try and keep it as simple
Speaker 1:as possible. So so we're we're there are in this value, I'm doing inverted commas, you can see me doing inverted commas now. But if you're listening in, of course, you can't. So the value, it may not just be about the the profits. It could be about assets.
Speaker 1:I'm I'm going to say, yeah, I think we may think about a building, but it's not about that, is it really? Could be all sorts. I think somebody would come up with, hey, I've got a building, I own a building as part of my practice and part of my business. I think we could all manage to say, yes, potentially an asset. Mhmm.
Speaker 1:But I've had a bit of software built.
Speaker 2:Mhmm.
Speaker 1:Because I didn't feel that I could get something off the shelf, so I've had that built and and your client list.
Speaker 2:Mhmm. A 100%.
Speaker 1:Yeah. Assuming assuming they're good assuming they're number one good clients and number two that you have been nurturing them and that it's not an empty
Speaker 2:list Kind of of slight disinterview. You can
Speaker 1:you can Oh, yes.
Speaker 2:What it So it's a really simple tool.
Speaker 1:Hang up. For those of you listening in, alright Yeah. We have to explain this because you can't see this. I thought she was about to do a a, like, hightail it sort of out the office and get on a plane because it's actually a little book that's passport size that says passport to exit by Yeah. A y business law.
Speaker 1:Tell me what that is.
Speaker 2:Thank you, Sian, for letting me explain it because it will help keep me focused as well. So this is a little booklet that we've tried to put together we have put together to get that business owner that we're trying to encourage to think about things sooner. It works its way through the questions that you've asked me. So is your business capable of being sold? And there's a little section here with a tick box with a number of different things that you can tick.
Speaker 2:The more of those boxes that you can tick, the more valuable your business is I want to have a look at this.
Speaker 1:I am. I love simple publishing.
Speaker 2:I just do. I knew you'd like it. I meant to give it to you before.
Speaker 1:I I love simple simple publishing. I I don't know how to explain this. I love doing I I have an industrial printer that I print quite naive books, little magazines, and business stuff on, and I just love it. And I'm getting a really good reaction from things where where it's not massively glossy. In actual fact, this is really really nicely produced.
Speaker 1:It's beautiful. It's really nice to touch. It's smart. It's like nothing I've done. I've been comfortable with this.
Speaker 1:I'm sure
Speaker 2:it's it's your stuff is you've probably inspired me to do this, Sian,
Speaker 1:to What be this is is it is just so simple. So it's a passport size little booklet and is your is your business capable of being sold? Just very few words here and it's got repeat customers, long term contracts, IT systems or software, a good name and reputation of premises, stock or equipment systems and processes. And it just takes you through that. And then it goes on to helping you work out what is your business worth, how do I find a buyer for my business, how do I prepare for a sale.
Speaker 1:There's an
Speaker 2:You can do without me now, really. You can just read that out.
Speaker 1:Yeah. And there's an audit questionnaire.
Speaker 2:Yeah. That's that's you're gonna cover all this, I'm sure.
Speaker 1:How do I prepare for a sale? Oh, what a what a lovely little booklet.
Speaker 2:I'll be bringing loads of those along to the
Speaker 1:exhibition as It's really, really nice. You see, I I think selling a business frightens a lot of people. I think they think it's beyond them. I can't think about it, it's not big enough, it's not the right business, it's not posh enough, it's not professional.
Speaker 2:They minimize what they've built. They don't think that they're capable of it. And I just wanna make everyone realise that if you've built a business, you will most definitely have something that someone might be prepared to give you money for. So I just want everyone to make sure they think about it. When you
Speaker 1:I I don't know. What's what is there an example of a type of business where I I don't quite know how to ask this. I'm going around in circles here. Where when you say what type of business it is that people will go, really? You sold that?
Speaker 1:Somebody bought that?
Speaker 2:Well, I suppose I mean, what if I sold in the last three years? Let me think. I've sold a tech business. That's probably not surprising because the platform was functioning without my buyer without my seller. Sorry.
Speaker 2:I've sold a business that stored human tissue, in a big storage container. Again, that's got quite a physical presence, so
Speaker 1:Yeah. You can
Speaker 2:see why that would have value. I I am gonna sell this client list for this person I mentioned.
Speaker 1:I'm actually determined that. I suppose that is the sort of business that I'm thinking about really. Somebody who is a coach. Yeah. Somebody who's providing a very sort of personal service.
Speaker 2:Yeah. I mean, again, it depends how that coach has, say, structured themselves. But if they've got, for example, you know, a manual or some materials that Products. They use or products that they
Speaker 1:either Yeah.
Speaker 2:Either that they give to their patients, clients, whatever you call those people, or a system that they follow, you know, if they've got particular qualification and they've built up a system whereby they onboard their clients in a particular way, they've streamlined everything, what you'd then be looking for is going to say another coach and saying, look, it's not just my client list that you could buy here, you can have you can buy my client list and it's generated x amount of profit over how many years. But also, if I give you my business know how, because I've been doing this longer than you have, you will make your business a better business. So it might not feel like on the face of it, there's much there to sell and that's that's just a conversation I want people to start having with me. And there is a section in there which you might have got a question on this to come up, but I'm prone to jumping around. But there is a section about how do I find a buyer and there's, you know, there's the obvious answer there which is a lot of people go to business brokers, they pay them a sum of money and they stick their business on a website.
Speaker 2:My suggestion is that you and there are other sort of types of people not just brokers. So I work with some really good corporate finance people, big companies and small companies and yes, there are the big corporate finance houses in London, they don't want to hear about the small businesses. But I know corporate finance people who are tapping into that smaller market as a gap in the market. So I've got people that can get more involved in your business and give you more sort of suggestions and creative ideas about that. Also help you get your numbers right, that sort of thing to prepare.
Speaker 2:But also I say to people look in your industry, look in your sector, but look up and down your supply chain as well. So it might be that you've got a client that might actually be prepared to buy your business because you're doing something within the supply chain that they could bring into their Yes. What they're manufacturing or producing or creating. Similarly from a supplier angle, I've got another transaction going on at the moment where she's basically buying a business because he's her biggest customer and she doesn't want him to be sold to one of her competitors. So she's gonna buy his business and absorb it.
Speaker 2:She's gonna run it as it is, she's not gonna change anything, she just wants to sit
Speaker 1:She's just gonna stop somebody else getting it.
Speaker 2:Exactly. So again, there's so many potential reasons why people might do this or and I can't give the answers all the time and it's not, I have simplified it as much as I can in there so that people begin to start thinking about it. But that's when you wanna start having those conversations with people in that sector. People like me, people like the corporate finance people I work with because we we we really just want there to be more deals done because how sad is it that you buy a you build a business and then it dies with you.
Speaker 1:And then you just it down. Yeah. Close it Yeah. The Yeah. I I think I think that's sort of what we traditionally might have thought of as a lifestyle business.
Speaker 2:Yeah.
Speaker 1:Where you run it, you take a salary out of it, and then you just close the doors. And I think what you're saying here is that actually that may well be why you started it, but it doesn't have to be how you end it. Absolutely not. That you don't have to be, you know, sort of a a magnet of industry.
Speaker 2:Mhmm.
Speaker 1:That there may well be a market for what a very very small business and that you need to explore the different things that are available. Yeah. One one of one of the things that we keep on touching on is systems and processes. So when you're thinking about in terms of I'm getting my business ready to sell, so you may already have some systems. Do you do you differentiate between the two systems and processes?
Speaker 1:Is systems one thing and processes another?
Speaker 2:Not really. I mean, I I'm just talking about mechanism which makes your business function without you.
Speaker 1:I could I could drill down onto into that annoyingly. No. No. No. No.
Speaker 1:No. When when we're we're not because I'll also start using annoying words like drill. So we'll be running things at flagpoles before we know it. So we're I'm just gonna stop. And really think about when we talk about those systems and processes and somebody sort of wanting to actually that being part of what you're buying, What is a buyer expecting to see?
Speaker 2:Oh, you mean in terms of, like, documentation
Speaker 1:and things like that? Yeah. Just the sort of how this business runs. Yeah. What what do they wanna see that's gonna go, actually, I can I yes?
Speaker 1:I can do that. That's that's usable.
Speaker 2:Well, I would be recommending if I was asking for buyers, and I do still ask for buyers occasionally. You wanna see some sort of operating manual. You know, you want that person to be able to sort of hand you some sort of folder, whether it's virtual or physical, which describes a customer journey, you know, from right back beyond the sale even, you know. So you've you wanna be able to know and understand what their marketing process is, what their onboarding system is for clients, what their how their delivery works, you know, who's doing what, what are the rules about how they do it. You know, I I bought my I have a business partner, but I'm always on about the operating manual and I always say things like, I'm gonna update that because if I go under a bus, you need to know what to do when you come into the office that morning.
Speaker 2:So it's really simplistic. So I'm not necessarily talking about anything that's ISO compliant or I'm not talking about anything that's techy particularly. I'm just talking about that sort of grab folder that you would give to somebody that they could pick up and know what to do in your business from day one.
Speaker 1:And I think sort of the other just listening to what you've been saying there, but there are different elements to it here. So there's there's in there, there's the elements of this is how we do stuff.
Speaker 2:Mhmm.
Speaker 1:That John or he this person that is in John's role, this is what John does, and that's the how we do that. But then the other side of it is the customer experience and how it's a pick because they don't care what John does when. Just all they care about is is what happens for them. Yeah. So so Yeah.
Speaker 1:There are different elements in here Yeah. That the potential buyer can see that this is what the customer's going to experience and this is how we actually make that happen.
Speaker 2:Yeah. Yeah. What's behind the scenes? Yes. And don't forget that's what the buyer wants.
Speaker 2:They wanna be able to come in. They don't want they don't really want disruption when they first take over your business. They want things to continue as much as possible seamlessly. You know, there's going to be, you know, changes whether those changes are just customers and clients becoming aware of the sale that can upset things. You know, there's always gonna be wobbles for the buyer once they first get going.
Speaker 2:But the more that they can just get on with it and have somewhere to go as a point of reference, which gives the information about, you know, who to contact, who do they use, who's their suppliers, you know, what are the telephone numbers, what are the email numbers. You know, it's it's simplistic, but it's it's absolutely essential to running a good business in the first place and then having a business
Speaker 1:that is saleable. So so it's it's what you really should have in place. Anyway. Now, part of my background is looking at systems and processes, and one of the things that I remember just being norm really is that there's a fantastic book. It's huge.
Speaker 1:It's all in there. And then you go and you ask somebody about it, and they've got absolutely no idea what is in that book. And so the the the the manual is a work of fiction. It's brilliant. It's huge.
Speaker 1:It has some value. It'll break your foot if you dropped it off the table, but it's actually a work of fiction. It's been written by somebody who who then may or may not have implemented it properly, but then the people who do the do found that didn't work and so they've got their own little workarounds Yeah. And the reality is very different to what was built. So if if you're advising a buyer, would you get I I mean, I'd ask to go in.
Speaker 1:I'd ask to go into the business with my manual and go, okay. This is what it says.
Speaker 2:So yeah, you're you're right. You mentioned the keyword implementation. So seeing the paperwork behind the scenes is only one part of the job when you're buying. You so we haven't got onto it yet. We've talked a little bit about the section in there about how to prepare for sale.
Speaker 2:But from a buyer's perspective, when you're buying a business, and to be honest buying in my opinion is way riskier than sale. When you sell, there's two things you care about. One, you want your money, and two, you don't wanna get sued for breach of warranty. We won't get too technical about that, although we could if you need me to. But that's your main target.
Speaker 2:One, your money. Two, don't get sued. Alright? When you're a buyer, you are taking on a number of risks. So first and foremost, you're paying good money for something.
Speaker 2:So
Speaker 1:you
Speaker 2:need to wanna make sure it's gonna generate the return on your investment. So you need to look at the numbers and that's where you start as a buyer. You look at the numbers. Again, we're back to the numbers again. They've got to be right.
Speaker 2:They're not just gonna look at the headline numbers, they're not gonna just look at the accounts, although they might give you a price based on the accounts. They'll then start something called financial due diligence and then they wanna look behind the accounts. They wanna look into all your costs, your overheads, everything that you've done, your marketing spend, and they wanna drill down into those numbers. So that's how you protect yourself as a buyer to make sure that you've got a financial proposition that makes sense. But then, as you've said, Sian, you then you then have to do proper due diligence into the operational side of the business.
Speaker 2:So again, it's a combination of asking questions, seeing documentation, but then if you need evidence for the things that you've seen, you are entitled as a buyer to ask whatever questions you want to ask about that business. And the more questions you ask probably the better because the more information you're going to have. The challenge sometimes is the sale process has to be kept secret and so, not always, sometimes, you know, people in a business know that their owner is potentially selling, but because it can bring with it uncertainty and it can bring with it change, sometimes
Speaker 1:a People lot of start living, people are for other jobs
Speaker 2:and things. So often sellers will want to keep it quite secret until you get really near the end of that process and near completion. But as a buyer, you can make an excuse to go in and look at a business in a different way. So we often say, pretend you're an auditor Yeah. Or pretend you're being you're you're just someone who's come to look because you've got some regulation
Speaker 1:You're looking at you're looking at the processes
Speaker 2:Yeah.
Speaker 1:Or something. Yeah.
Speaker 2:So you don't have to be on, it sounds awful, I'm not, you know, I don't like the little bit of dishonesty sometimes that you
Speaker 1:have to apply. I I was I was thinking about that, about, you know, I like to be open and honest with people. Yeah. But on the other hand, if it is a choice between, well the business just shuts and you haven't got a job, or the business sells and you have got a job. You might not like the end result, you might not like this person and the way they run it, but you have at the moment you've got a job and you have a choice.
Speaker 2:Yeah. Sellers always struggle with this as well because, you know, they've built relationships with their people over the years. Yeah. I can I mean, I say to them, look, just best that you keep it under wraps for now because you want to try and protect the business? There will be a point in the process where it will be more suitable for you to start talking to your people, whether those people are your staff, your customers, your suppliers.
Speaker 2:There will be a point where you can begin to have those conversations. But let's get a bit further in, let's make sure that the deal looks like it's going ahead before you start that because you could really muck up your business and have nothing at the end of it. But back to the buyer, putting the buyer's hat on again, yeah, if you wanna if you feel you wanna go in and you wanna have a little look around, wanna take the temperature of the room, of the, you know, the customer call center or, you know, the operations department, wherever it is that you feel you need to go to get some evidence. And if because it but but most buyers will concentrate on the bits that are important to them. So it may be that some of those bits aren't aren't so important.
Speaker 2:In which case that's fine. They can go, well, it doesn't matter about the call centre because actually we're going to move everything into our call centre, so we're not too worried about that. Doesn't matter about the staff because maybe we're going to be shedding some headcount and we're going to transfer things over. When you work for a buyer well, when you work for buyers, yeah yeah, you know, I find that as a buyer we've written down what you care about as a seller, getting your money and not getting sued for breach of contract. What you care about as a buyer is getting good money, getting value for money, getting a return on your investment and not bringing over a skeleton in the closet.
Speaker 1:Yeah. And being being able to run the business.
Speaker 2:Being able to so making sure you get your ROI is running the business, not finding a skeleton is also about your due diligence and making sure you haven't got any liabilities in there.
Speaker 1:Let's talk briefly about breach of warranty. So as a seller, the the the potential to be sued for breach of warranty. Do you want
Speaker 2:me to explain that really simply? Yes. Okay. So when you sign when the when you are asked sign a sale contract which sells either the shares or the assets of your business and I don't wanna get too Yeah. Legally technical but either of those is possible.
Speaker 2:Within that contract will be a section called warranties and it's basically a bunch of promises about the state of the business. So you will be asked to say things and they're not as simple as this unfortunately, but they will cover, you know, probably 10 or 11 different areas. So you'll be asked to give promises that you've paid all your tax on time, that you've never been late, that you've calculated it properly, that you have got the ownership of the shares and you can transfer them, that the employees are all properly employed on contracts, that there's no disputes, that the insurances have been paid and on and on and on. So there's a whole section of the contract and I'm teaching lawyers these days which I love. I did a session on warranties last week, so please don't worry if you're not keeping up with some of this because I'm teaching lawyers who are five, ten
Speaker 1:years qualified to a store. I think anybody who's listening in would not expect to to not wanna say, but to be able to go away and actually use this information like that. Yeah. What what this is doing is giving people the heads up.
Speaker 2:The heads up. So the heads up is if you give a promise in that contract and then something comes to light later that you didn't tell the buyer about, you could be sued for breach of warranty.
Speaker 1:Those those things that have all of the taxes being paid on time, so this is like national insurance and that sort of thing, isn't it?
Speaker 2:Is that not checkable? To a certain degree it is, but you will still be asked to give warranties for things that buyer maybe hasn't been able to find. So that goes back to how much due diligence do you actually need to do as a buyer. And I think one of the reasons I've found it hard to work for buyers sometimes is I'm never completely satisfied. Right.
Speaker 2:I just keep asking, I'm like, well I need to see that and I need to see that. And there comes a point where you sometimes just have to go, do you know what? I reckon we're 7080% of the way there. There may be a few things that we haven't found. We've got some warranties in the contract if someone's deliberately concealed something.
Speaker 2:So you know Is is that deliberately concealed? No. No. It doesn't have to be deliberately concealed. Okay.
Speaker 2:But it would potentially be worse if you deliberately concealed it as a if you ended up in
Speaker 1:a situation. What would be sorry. This is probably more information detail than we should go into. So what if you have a situation where you have a small staff and one of them is a pain in the ass, and you've had a couple of words Runnings. If you like.
Speaker 1:You've had a couple of of words that hasn't yet gone to a disciplinary,
Speaker 2:but
Speaker 1:it is well known that this person is just difficult. Yeah. So, you know, you've got a small team, say five people, and they everyone knows that this person is a bit of a
Speaker 2:Mhmm. A thing. A challenge.
Speaker 1:A a challenge, but you haven't yet made it formal. Okay. Is that the sort of thing? So I mean, potentially as a buyer, you know, I can imagine going in as a buyer, and there's this team, and there's this person and straight away we go, alright, okay.
Speaker 2:They didn't tell me about that person.
Speaker 1:And everybody else, like everyone knows and now you know, oh well yeah, he's always like that, oh yeah, he's always like that.
Speaker 2:Well, this is where the magic happens. So it will depend on the exact nature of the wording of the warranty. And if I tell you that I have sets of warranties that are one page long, seven pages long, 25 pages long, and 70 pages long. Because I've dealt with deals over the last thirty years that range in value from a couple of 100,000 to several million. In fact, my biggest deal was 70,000,000.
Speaker 2:I used to have sleepless nights about that.
Speaker 1:Yes. I'm not I'm not sorry.
Speaker 2:But the reason I'm mentioning in that is because the the exact nature of the warranties will depend on a number of factors. One of which is what is the risk and the value in this deal? Because the more there there is risk, the higher the value, the more due diligence a buyer is gonna do in the first place and the deeper the warranties are gonna go. And you may find warranties that are as broad as what you're describing where you say, have you had any issues with staff who have been late or Buyers can come up with some very creative language to draw out issues that they may be concerned about.
Speaker 1:Because in a team of of four or five people, a key a key person, if you like, somebody who is, say, the customer relationship manager who is dealing with the clients, who is a pain in the arse Yeah. Actually behind the scenes Yeah. That's a that's a key Quite an important part piece of information. Yeah. If it's somebody who's working full time
Speaker 2:Yeah.
Speaker 1:Or working part time and comes in and helps out with some of the stock
Speaker 2:Yeah. And some warrant you'll see sometimes that a seller will be asked to provide a list of key people and then there may be some more Right. Specific warranties that relate to those key people. But what you've always got to remember, and this is partly why I don't like acting for buyers really because where do you draw the line? When do you stop asking questions?
Speaker 2:Yeah. Well, the answer to that is it's got to be realistic and reasonable. You know, you don't want a legal bill that's 6 figures when you're buying a business for, you know
Speaker 1:Yeah.
Speaker 2:£250,000. That doesn't make sense. Yeah. But if you're buying a business for 70,000,000, you might be quite happy to spend a couple of 100,000 on doing all of this investigation. Yeah.
Speaker 2:There is no one size fits all. There's no this is not cookie cutter territory, sadly. One of the reasons I love it so much is because there is such a Yeah. And it's a collaborative thing. You've got to work with your client whether you're acting for the buyer or the seller and say, okay, when you're a buyer, obviously you want to find as many skeletons as you can because you're going to be stuck with those skeletons.
Speaker 2:Let's risk assess where the problem areas are going to likely be. What parts of that business do you really need to dig deep into? Which bits of that business can you maybe just skirt over? And how much do you want to spend on the due diligence exercise? It's got to be commercially realistic.
Speaker 2:And as a seller, you know, if you're selling a quite small business for small amount of money and you get, you know, a 25 section due diligence questionnaire with 20 questions in every section, you know, you're gonna probably go back to the buyer and say, look, this is over the top, you know? Yeah. It's gonna take me six months to fill all this in and cost me, you know, x amount in legal fees to have help with that. So the best way to manage these deals is and I don't like it. So someone comes to me and says I want to sell my business and I say to them, right, let's go through this audit questionnaire to get a little bit prepared for the areas that the buyer is going to start asking you about.
Speaker 2:I don't know exactly what the questions are that they're going to ask you, but if you start getting this information together, you've made a good stab at it. But I always say to them, you want to sell your business and you want it to be a success at the end. So you should really collaborate and I think that's one of the reasons I like this area of work so much is it shouldn't treat as an adversarial process. You know, the buyer wants to buy a business, you want to sell a business. And actually, this might be maybe not good business for me, but if someone comes to me and says, oh I don't wanna I don't wanna tell them about that and I don't wanna tell them about that and I don't wanna tell if they're brushing loads under the carpet, I don't really wanna be involved.
Speaker 1:No. It's it's
Speaker 2:It's gonna end badly, you know. The buyer is if they're not being completely transparent about stuff and then buyer finds it, then they're gonna be back in my office in six months to twelve months time with a breach of warranty claim threat against them and you know, people rattling their sabres and it all just gets horrible.
Speaker 1:And that defeats the point of selling it, doesn't it?
Speaker 2:Exactly. Yeah.
Speaker 1:So I tell you what I want to do now before I forget is how can people get hold of you, Aly? How can they contact you?
Speaker 2:So I would love people to connect with me on LinkedIn. I do do a bit of education. I hope it's education. There's a few videos and things that that talk about stuff in a really simple way. So please connect with me on LinkedIn.
Speaker 2:I'm just Aly hyphen Young at LinkedIn. I don't know. How do I share that? I don't know how to put that anyway. Yeah, find me on LinkedIn, Aly Young.
Speaker 2:I think there's a link on LinkedIn to my website. My website
Speaker 1:What we'll do on the on the webpage for this show going out, we'll make sure that Aly's contact her details her linked to honestly. Yeah. Linked to that one.
Speaker 2:All that stuff
Speaker 1:Will be on
Speaker 2:there. Will be on there and it'll be a link and then they can just easily
Speaker 1:I I would think if somebody goes on to LinkedIn and looks for Aly Young Aly Young Law. They're not gonna find two
Speaker 2:two million. If you go onto our website, there's definitely only one ay-law.co.uk website. So go on that website. You can download the passport that Sian's got, and you'll find my LinkedIn on that website, I think, as well. So if nothing else, go onto that website, and there's other information there specifically about selling.
Speaker 2:So yeah, hopefully that would be somewhere you can go for information. Thank you.
Speaker 1:You're not just you're not finished. Alright. Okay. So imagine we've got somebody out there listening in who's thinking, okay, I might like to sell my business. What should they do today?
Speaker 2:Well, look on my website, obviously, that's the first thing to do. Must do that. But yeah. Download the audit, Get your business audit. Get your start with your numbers.
Speaker 2:Start with your numbers. Go to accountant. Here we go. Go to your accountant. Accountants are amazing people.
Speaker 2:I say that because they refer a lot of work to us. We think you're wonderful. Because let's face it, when a business is going through its life cycle, it will need an accountant. It's never gonna get away without having an accountant. So they'll always have that adviser there and they'll be a trusted adviser already.
Speaker 2:There'll be an existing relationship and they will know your business. Have a conversation with your accountant first off. And then hopefully, that accountant at some point will say, probably gonna need a lawyer to help you with the paperwork. But then there's also this other group of people, corporate finance people, who will do even more than we will do with that audit. They will dig deep, they will some accountants bless them, they've not been through this process before, you know, they might have a really wonderful client base, but nobody's ever sold.
Speaker 2:So, you know, again, they're the best place to start, but then if you need more additional financial help or help on the sort of preparation side, corporate finance people, we work with some really amazing people that we can introduce you to. And then, yeah, start with the numbers, get your house in order, and then start just opening your mind to the possibility. The fact that you're even thinking about it and opening your mind to it is the first step. And nothing nothing happens, Well, sometimes things do happen quickly. Sometimes we get people knocking on our door and say, I've got a buyer who's offering me a crazy amount of money, but it's all got to be done within the next month.
Speaker 2:And you go, okay. We better crack on then. But by and large, it normally takes from the from the moment that you start thinking about it to maybe leaving your business. You know, it could easily be a couple of years, one or two years. So, you know, it's not something that happens overnight, but start that thinking process and then reach out to your current trusted advisers and then build your team of people to help you get the best value and make the process as easy as possible.
Speaker 1:And I I think that one of the things I really like about this is that what you need to sell is actually also what you need to run and grow your business. So you need to know your numbers and you need to have systems and processes in there. So even if you decide not to sell, you're gonna have a better business for for really looking at those numbers.
Speaker 2:It's making me excited because I know that is the case and therefore I don't feel like I'm getting people to do anything that's pointless.
Speaker 1:That they shouldn't be doing anyway.
Speaker 2:It's a wonderful thing to do and in fact last year we had somebody who came and they were very very keen to sell. There was a lot going on in their personal life and they were, you know, really at the point where they were like, I've just got and that often happens, you know, people get to that sort of crisis point before this becomes an issue for them. We took them through our audit process, we gave them the facility of electronic data rooms. They could start storing all of their data. You know, some people will have their own systems for that already, but if you haven't, we've got that that facility and, you know, we can help you with it.
Speaker 2:But by the time she'd done all of that and she was also working on her numbers, she got to the end of it and she went, do you know what? I'm not selling now because I'm not gonna get enough if I sell now. Mhmm. But I've seen in collecting all this stuff together
Speaker 1:And I'm gonna run it for a
Speaker 2:I'm gonna but I'm gonna do something different and I'm gonna go again in two years time.
Speaker 1:That's brilliant, isn't it?
Speaker 2:It's it's amazing. Yeah. It's music to my ears, makes me sing, my heart sing. So yeah, it's a good thing to do whether you sell your business or not. It makes good business, so you won't regret doing that process.
Speaker 2:Yeah. I was gonna say something else and I've forgotten, but there we go. It might come back to me in a minute.
Speaker 1:Should we sit and look at each other? What else falls out. I just
Speaker 2:I love what we do, and I and I I want people to really, you know, understand that they've got something. Everybody's got to have built a business at all, you know, you you
Speaker 1:are have had something, haven't you?
Speaker 2:Yes. You've got something. Just just just dig a bit deeper and and consider it and don't get crisis before you start thinking about this, definitely.
Speaker 1:Aly Young, thank you so much for coming onto the radio show. Thank you for being at the Women in Business Big Show as well. And thank you for creating a y business law for changing what you do and for creating this, you know, really super way of peep for people to look at growing and and selling the business. It just makes it, I don't know, say worthwhile. I love my business.
Speaker 1:I really do, and I can't ever imagine giving it up. But, boy, wouldn't it be lovely to have a little pot of gold at the end? Nice to have the option. Thank you, Aly, so much. You for being on the Women in Business Radio Show, and we will see you all all in our next episode.
Speaker 1:Thank you.