Selling a small food company–a short story

Last July, we signed the Share Purchase Agreement for 100% of the shares of a small food importer and e-retailer I founded 3 years ago in Helsinki, Finland. It was an exciting, happy-end-to-my-venture yet humbling experience. The process taught me a few lessons about negotiation, organisation and expectations management. So here’s the little story, as it might be of interest to other entrepreneurs undergoing a similar process.

Background: the motivation to sell or terminate a business

The process started from my desire to focus my energy on my research and consultancy business. While running the latter, I had launched and managed to grow, part-time and with the help of highly competent and committed people, a little gourmet food business. However, my cost-of-opportunity meter was telling me to focus, and while I enjoyed the gourmet food experience, my heart was calling me in another direction. Then, my husband was offered a job in London, and this gave the final tilt: I was determined to sell or close the business ahead of leaving Finland in the summer. Sometimes events outside our control will make the final push, sometimes you just have to ensure to follow through and re-align your focus where you want it to be.

The steps once the ball gets rolling

Alambique Oy products in a Finnish retailer

At first, I was not even thinking to advertise the business for sale (it was such a personal enterprise; placed in a small niche and -last but not least-, I have a tendency, like many, to undervalue the fruits of my own efforts). Besides, I did not even know where to put an ad for it in Finland! Then one evening, almost as a reflex movement in my local expat community, I made a quick post in the Españoles en Finlandia Facebook group. There, against all my expectations, more than 8 different people showed signs of interest. I guess I posted there thinking that, an SME that already has a loyal customer base and positive cash-flow and deals with producers in Spain with whom it has exclusive agreements would be interesting, first and foremost, to Spanish people in Finland with entrepreneurial interests and/or a need for self-employment. As in most small affluent Western countries, in Finland foreigners’ employment prospects are not always as clear as they are for locals, in spite of qualifications.

So, when this momentum in the Spanish community started to build, I had to switch to selling mode:

First, I built a thoughtful and comprehensive presentation of the company for a prospective buyer, including all the important data (marketing and sales strategies, financials, cash-flow analysis, supplier agreements, trends, background, statistics on clients, customers, suppliers, partners…). It is a lot to tell, even for a tiny and young SME, and it is critical that it comes in a clear, transparent and attractive way.

I also made sure to share a bit of my vision going ahead. I did not want to sell the business on the cheap, as, in the right hands, it has a bright future. By sharing ideas, vision, experiences and expectations, you can help build the relationship with a potential buyer, whetting their appetite to take on a challenge and not only fight for the best price. It is not a bad strategy to share all the growth ideas and hacks you had in mind with your prospective buyer (but only when you’re farther ahead in the negotiations and have confidentiality built-in the information). Sharing creative and positive future opportunities helps build trust with a target buyer and will heighten the chances – all other items being in good order-, of building rapport and pre-purchase loyalty and (ideally!) closing a better sale.

On this matter it is of critical importance that, if you love your business and want it to thrive going forward, you really choose to whom you sell it! For me this issue was solved as I took the negotiations forward only with the people I considered suitable and competent. (Another post about selecting the right buyer might follow…)

Finally, preparing myself for a last sharing phase with the buyer, I started to list and describe all the company assets and tools (this spans anything from invoicing and inventory management systems, e-commerce and warehouse process, to CRM SaaS to warehousing rules and agreements to contracts with suppliers and partners and also things like our newsletter software or even our social media tools and overall strategies)… everything that makes the business run. Basically, this provides a good overview of the key aspects of the operations and their cost and helps in the closing phase of the negotiation. When well documented and carefully described, this documentation is a valuable handbook for the handover process.

The lessons learnt

One thing you don’t want in your little bag of tricks is to be rushed. Impatience is a bad enemy for a good negotiation. Another bad ally is any form of reactive emotional response in the process. If you become impatient or restless, you will weaken your position. Impatience may be caused by many factors, including a tight calendar on your side or a patchy process of decision-making on the buyer’s side (which looks like the norm in these small business transactions!). There is a high likeliness that everyone is in this process for the first time, so keeping your cool and a wide-angle view is the number one asset. This does not imply being a weak negotiator, it just means:

  • eliminate impatience. Being impatient or taking things personally in this process
    is a natural response to be avoided like the pest
  • read between the lines and map out all possible scenarios of “why” your prospective buyer is taking X or Y stance at any given moment
  • never be suspicious or take anything personally, but rather, as above, make your own mind-map of why your buyer could be suggesting different issues and address them with options that offer clarification and a clear solution or roadmap for issue at hand. Think of it almost as making mini case-studies, since the learning angle will already be helping the buyer to think from the driver’s seat
  • It is likely that your prospective buyer is investing their own money into your business. You have to put yourself in their skin and understand they need all the guarantees they can get and your role is to build-up trust in every step.

This post has no claims to being comprehensive, normative or a guide. It’s a simple comment on a personal experience selling a small yet profitable and growing business. 

Alambique Oy opened its doors with support from the Instituto de Comercio Exterior de España (ICEX) and Spain’s leading kitchenware shop and cooking school Alambique, SL.