Entrepreneurs don’t want to leave their own businesses even after they’ve sold them, research from Livingstone’s Heart of the Deal report has found.
A substantial 75 per cent of business founders say they want to stay on after they sell their business, with nearly half (44 per cent) wanting to stick around up to three years after sale.
This desire is particularly noticeable among younger entrepreneurs: 90 per cent of 16-24-year-olds say they want to keep working for their business after a sale, compared to 30 per cent of 45-54-year-olds.
There are differences across industries as well; business founders in the tech sector are more likely to want to stay, with just 19 per cent saying they want a clean break after selling, compared to 26 per cent in the consumer sector, and 33 per cent in the business services sector.
Will buyers look after the business?
Central to business founders’ concerns over selling are fears that the buyer wouldn’t take care of their business – 41 per cent of founders cited this as their main worry. For 23 per cent, the chief concern is whether the new owner would enable the business to grow, and for 16 per cent, it’s a question of what would happen to their staff.
“Central to business founders’ concerns over selling are fears that the buyer wouldn’t take care of their business”
Jeremy Furniss, Partner at Livingstone questions the notion that a small business owner will want to sell a company then head for the hills.
‘It’s interesting as well to see that this mindset is especially prevalent amongst younger entrepreneurs. We have a group of young business men and women who are motivated to build, sell and stay the distance with their companies for the long term.’
Interestingly, younger entrepreneurs are more likely to factor in selling the business as part of the overall business strategy: 60 per cent of 16-24-year-olds and 61 per cent of 25-34-year-olds see this as vital, compared to just 44 per cent of 35-44 and 40 per cent of 45-54-year-olds.
It’s also more of a priority for male founders compared to their female counterparts – 60 per cent of men saying this was their business plan compared to 48 per cent of women.
The energy that founders put into their business explains their difficulty in letting go. Figures show that 83 per cent of all entrepreneurs sometimes or always have problems letting go of a business.
A smaller 77 per cent of entrepreneurs say they often put the needs of their business above anything else in life – a figure that’s remarkably consistent across businesses of all shapes and sizes.
The side effects
This has an impact. Of the 200+ founders surveyed, 14 per cent say they are constantly lonely, and a further 44 per cent admit to feeling isolated at points. This is likely to be a reason for the focus on an eventual exit.
Jeremy Furniss, partner at Livingstone, says that starting, running and selling a business can bring about a real mix of emotions in entrepreneurs.
‘Founders’ attachments to their businesses goes deeper than simply monetary value. Entrepreneurs aren’t simply looking for any sale, they are looking for a buyer who truly cares and understands their business and its culture.
‘Fittingly, we found that the most common cause for deals to fall through was not a question of timings, valuation or deal structure, but because it just ‘didn’t feel right’’.