In this company interview, we sat down with Jordan Greenaway, our Managing Director, to discuss June’s research report and what the key reputation recommendations are for entrepreneurs thinking about selling a business. The full research report can be downloaded here.
Why did you decide to focus on this particular subject?
Jordan: I wanted to get to the bottom of how people thought about business sales. And the results were stark. Nearly four in 10 people said they were would think a business was in financial difficulty if they heard it was up for sale. That is despite the financial health, strength, and growth trajectory of the business.
People just immediately jump to this, often false, conclusion that the business is about to collapse. Employees, suppliers, and others start to think: why else would they sell? That’s staggering, and must surely keep people up at night.
The pandemic has given many families and entrepreneurs pause to reflect on the future. Whereas many entrepreneurs thought they might hold on to their businesses forever or pass it down to the next generation, more people are now thinking about selling up to pursue other projects, retire, or focus on other priorities, such as philanthropy.
We have heard this from many clients, but this has been born out by the statistics too. There was a great report out from Lombard Odier that passed my desk a few weeks ago, showing that more than 6 in 10 entrepreneurs are now thinking about exiting their businesses, either now or at some point in the future.
Which audience is this research for?
Jordan: There are lots of misconceptions about announcing the sale of a business. The biggest one is that entrepreneurs can just say nothing — or close their eyes and hope that the news doesn’t leak. I wanted to see whether this strategy is feasible and — if it’s not — what should entrepreneurs and shareholders do instead.
The people who will benefit most are those who are thinking about selling their businesses in the next 3 years; they need to start thinking about how to communicate that now.
They cannot just go around their networks looking for a buyer or start conversations with bankers; these chats will leak and, before you know it, the business and entrepreneur is on the front of the trade or local press. The outcome could be a dramatic loss of confidence in the business. Entrepreneurs must not let it get to this stage.
Of course, entrepreneurs and shareholders who are much earlier in their journey will benefit from the research too — it will provide them with the intelligence and insight that they will need to think about these problems in the future
What piece of data surprised you the most?
Jordan: The result that shocked me most was that the public does not mind if an entrepreneur says they are selling up to crystalise their wealth. In fact, one in four respondents said that this was one of the reasons for selling that they would look most favourably on.
In fact, the public preferred to hear an entrepreneur say that they were selling up to realise the financial rewards of a business sale than they would prefer to hear an entrepreneur saying that they were selling up to focus on philanthropy.
This makes sense on reflection, but I think many people would have been caught out by this result. The upshot is that the public has no problem with a hard-working entrepreneur — who may have worked tirelessly creating a company from scratch — selling up and realising the financial rewards. The public sees the founder as deserving, straightforward, and candid.
Whereas saying that you are going to ride off into the sunset to focus on philanthropy might come across as contrived and artificial. That’s not to say that entrepreneurs should no talk about their charitable work, if that’s the genuine reason for their exit, but this needs to be done carefully; we go into a little more length about how to communicate this in the research note itself.
What is the one takeaway recommendation?
Jordan: I’m going to cheat and give you two: firstly, don’t think you can say nothing. And, secondly, don’t think you can just wait it out unless you are literally forced to say something.
Speculation gathers in a void. If there is no information out there about why the business is being sold — such as to pave the way to retirement or otherwise — people will jump to negative conclusions.
And after people jump to these negative conclusions, the narrative is very difficult to shift. If there’s an article in a trade publication saying that a company’s employees are starting to get concerned about the future of a business, everything you do in response will just look defensive. The position is recoverable, of course, but it takes much more effort and thinking.
Instead, entrepreneurs, founders, and shareholders need to get on the front foot and control the narrative about the sale process; announce it proactively before it leaks out some other way.
And finally: don’t think a watertight Non-Disclosure Agreement will help you out. An NDA might give you psychological comfort, but when a journalist calls and says that someone has told them that the business is going through a sales process, the NDA is not going to help you. The journalist won’t tell you their source, and an NDA won’t stop them from publishing.
Why is Transmission Private’s research different?
Jordan: It is based on hard, real evidence. This particular bit of research is based on a survey of 2,000 people conducted by polling agency OnePoll, which is a member of ESOMAR.
Too much research and best practice in the PR industry is based on instinct or some mythic way PR has ’always been done’. Communications needs to become an evidence-driven trade, and our research is part of providing a robust evidentiary basis to our recommendations.