To sell or not to sell....

Last week I was asked to meet up with a couple of young entrepreneurs and give them some advice about selling their business. 

And they were young indeed - in their twenties and looked even younger - they'd come out of university (one had dropped out) and gone straight in to starting their own business and are part of a generation responsible for creating a new breed of web based companies located at 'Silicon Roundabout', as it's colloquially come to be known; in fact they have two companies, one building apps and the other creating realtime functionality for web and mobile apps (don't ask). 

They had been approached by an American buyer for one of their companies and were deliberating what to do about it. Having myself been through a sale to a US group, buy back and a merger, and also old enough to be their father, a contact had thought they might get something out of hearing my fourpennyworth.

I found them delightful guys, remarkably sophisticated in many ways, far more so than I had been at their age in business but also somewhat naive in other areas.

We chatted for several hours but in essence my fourpennyworth boiled down to this:

It probably won't work - most takeovers don't. The clash of cultures between maverick, independent, fast moving, freewheeling entrepreneurs and big corporate culture is a recipe for disaster - the ingredients simply don't blend together. One only has to witness the debacle between Autonomy and HP to see how disastrous it can be. The buyer wants the entrepreneurial, agile, innovative qualities of what they're buying and then bizarrely proceeds to suffocate these very attributes out of the business they've acquired. 

The very reasons you start your own business are the antithesis of big corporate life - the politics, the interminable meetings and the decisions by committee. I told them a story about a meeting I attended shortly after selling my business, in which a chart was put up which looked like the blueprint for a nuclear power station and I was shown where my name slotted in to the hierarchy of the organisation- I still get a cold shiver down my spine when I think about it.

It's also important to ask yourself the question, why are you selling?  And give yourself honest answers. Often it's about cashing in and that's fair enough. There comes a time when you want to reap some of the rewards from all your hard work, long hours and financial risk. But do it fully recognising that's what you're doing and not kidding yourself you are going to have the same motivations after you've sold and slot in to the corporate culture of your new owners. If you have a profitable business which you are enjoying running, you need to ask yourself what you are going to do with the money from a sale and is it really worth the sacrifice.

And finally if you are in your twenties, super talented and the world is your oyster - think big and be ambitious! There is no reason you can't be a world beater and end up buying the company that wanted to buy you.

I have a feeling for these two guys the sky's the limit....