How to tell your board you want to sell

The words themselves are short. Everything around them is difficult. The board may hear it as a loss of nerve, family shareholders may hear it as a betrayal, and the management team, if they hear it too early, may start looking for other jobs. Done badly, the conversation can damage the company’s value before any buyer has seen a number.

Know why, in one sentence

Before you say anything to anyone, write down why you want to sell, in one sentence you’d be comfortable reading aloud. "I’m 67 and nobody in the family wants to run this." "The next stage needs more capital than we can raise ourselves." "A larger competitor will be able to undercut us within three years."

If you can’t write the sentence, you’re not ready for the conversation. If you can, every later question will come back to it.

Talk to the chair first, alone

The first person to hear it should be the chair, privately, in person, with nothing written down. The chair will know how the rest of the board is likely to react, and who needs to hear it before the meeting so they don’t hear it in it.

Board members hate surprises far more than they hate bad news. A director who hears about a possible sale for the first time in a full board meeting will spend the meeting deciding whether they were deliberately kept out, rather than whether the idea is right.

Bring options, not a decision

Don’t walk in asking the board to approve a sale. Walk in asking it to consider one, alongside the alternatives: selling the whole company, selling part of it, bringing in a minority investor, hiring an outside CEO, or carrying on as you are with a clear plan. Each option should come with a rough sense of value, risk and timing.

That turns "Do we sell?" into "Which of these paths is best?", which is a question boards are good at. The board doesn’t need you to be certain. It needs you to be prepared.

Protect the business while you decide

Keep the circle small: the board, your CFO and one outside adviser, for as long as you can. Agree in advance what you’ll say if word gets out, and to whom. And keep running the business as though you’re not selling, because you may not. Buyers pay for momentum, and a company that slowed down while its owners deliberated is worth less.

Plan for the family, too

In family businesses, the board conversation is often the easy part. The family conversation is harder, because it carries decades of history that has nothing to do with the balance sheet. In one company we worked with, eleven shareholders across three generations had spent two years failing to agree on a successor. What helped was talking to each of them separately before anyone met as a group, so everyone had said what they thought before they had to say it in front of each other.

A family council that meets apart from the board can give those conversations somewhere to go. It keeps the boardroom for decisions about the company.

Expect the questions

Once the idea is on the table, the board will ask the same handful of questions, and you should have honest answers ready before the meeting:

None of these need to be answered perfectly. They need to be answered by you, in your own words, before someone else answers them for you.

This week

If you’ve been thinking about selling, write the one sentence. Then put a private lunch with your chair in the diary. Everything else can be prepared once those two things are done.