5 Tips For Toy Company Owners Who Want To Sell Up
It’s hard to miss the fact that owner managed firms abound in our business. even where the original founders pass on or retire, there is often a retained family management team. The 3 biggest companies in the industry all started as family firms.
Not every Toy company owner wants to pass their business on though. The allure of a big cash-out to sail off into the sunset can be compelling. However, anyone who has actually tried to sell their business, or actually succeeded will tell you it’s not always a walk in the park.
We’ve worked on around half a dozen company disposals in recent times, and while the end result was rewarding, the process itself left exhausted and frustrated people behind!
It doesn’t have to be that hard, our service aims to streamline the experience so that you don;t have to go through the entire A-Z process with no previous experience/expectation to guide you.
As a taster, here’s some tips to help those aspiring to selling up:
1. Prepare Thorough, Professional Company/Due Diligence Presentations
You wouldn’t try to sell your products from a hand scrawled sales sheet (at least I hope you wouldn’t!). So why would you expect to be able to sell your company with a random selection of documents presented as if they’ve been thrown together with no thought or focus on what the potential purchaser will care about.
We’ve worked with companies who created hundreds of pages of tailored, insightful information, insight and analysis.
We’ve also worked with companies who printed off sales and stock reports and not a great deal more…
…guess which company successfully sold up?
2. Have A Clear Target Purchaser In Mind
Maybe you want to sell out to competitors, or to other companies who want to enter the space you’re in.
Maybe you’re in a good place to be bought out by venture capital/hedge fund/investment firm money.
The point is though, that you need to have an idea of which kind of companies might find your business attractive. For example, a company which will clearly gain ‘synergies’ from buying you out and bolting on your business to theirs may be a good target.
3. Have A (sane) Sale Price In Mind, Factor In All The Assets
Forget your emotional investment in the company, sorry, but nobody cares! look instead at objectively valuing your company.
The process of selling a company is a grinding process. So be ready for the grind – have an idea on what value you expect/can justify/you think the other party may pay for each asset type.
4. Plan For Management Transition In Advance
The more pivotal you are to the running of your business, the more difficult and lengthy will be the process of extricating yourself after sale. It’s normal for owner managers to be tied into their businesses for upto 2 years, or even more, with payments split between initial and staged milestones over time.
However, if you are selling a business with existing management structures which don’t need you, then clearly you are more likely to be able to sell and move on more quickly.
So before doing anything, we suggest planning for transition, hiring a CEO/MD, and you may need a couple of appointments before you get that right. You then also need to manage the management you put in place through the process to ensure they are motivated/incentivised to stay on & deliver after you depart.
5. Prepare For The Rest of Your Life
This is less a business tip than a tip to aid your transition into a different life. Those who have been working in/on a Toy business for years have invariably had a highly immersive, challenging full time (or more!) occupation. The day that stops is going to present you with different challenges.
For sure you may be looking forward to that cruise, or more time on the golf course, but the reality can often be dull and unfulfilling, so plan in advance how to manage that / keep stimulated…
…and in the meantime, keep building your business, because selling a company doesn’t happen overnight in the vast majority of cases.