The director of a technology start-up acquired by Telstra last year is urging business owners contemplating a sale not to be fooled by the scale of the process, saying that selling a business is much more challenging than most people realise.
Jason Titman, of ecommerce provider Neto, told My Business that the process of selling a majority to one of Australia’s largest companies was “a learning, worthwhile experience” but one which did not come without its share of challenges.
“What was daunting was going into due diligence and when they provided us a due diligence pack, there was 55 people's names on the pack, and there was essentially just [my co-founder] Ryan [Murtagh] and I that had to deal with it. So it was kind of two up against 55,” Mr Titman said.
One of the biggest challenges Mr Titman said surfaced during the negotiations was keeping the business running at the same time.
“We had to be careful that we did our due diligence […] but at the same time we had to try and keep running the business, and the conversations with Telstra essentially went over nine to 10 months. So for a small business entering into something like that, that is quite a drain on it,” he said.
Another important factor was ensuring they kept their staff in the loop to minimise disruption to them, and in turn, to the operations of the business.
“Be prepared that it's going to be a hard process and that you've got to be really careful with your staff about being as open with them as possible, understanding that there is typically going to be confidentiality agreements there,” Mr Titman said.
“Keep the confidence within [your] team that everything will be alright. We got lots of questions, but we said to them 'the reason we are selling is to go to the next level, so basically there is a huge opportunity for everyone – you're part of something here at ground level'.”
When it comes to determining who to sell the business to, Mr Titman said that it is important to find the right cultural fit, particularly if you plan to remain working within the business.
“You see so many times where founders and the new shareholders just don't hit it off and the internal culture starts to deteriorate, and potentially there is a loss of value for both sides really in the investment,” he explains.
“To maximise their investment […] make sure that there is going to be the right alignment between the investment partner that [you] are bringing on – it's not just about the money.”