It’s easy to imagine selling a business as a clean break. You find a buyer, agree on a price, complete the handover and move on.
In reality, a successful sale depends on much more than getting an offer. There’s due diligence to complete, financing to arrange, contracts to review and, crucially, a buyer to assess. Choosing the wrong person can have serious consequences, particularly if part of the purchase price will be paid after closing.
That’s what happened to Rachel Jesson, a South African entrepreneur who sold her family business through BusinessesForSale.com. Her experience offers some hard-earned lessons for anyone selling a business – from understanding the risks of seller financing to looking beyond a buyer’s ability to pay.
Tip: If you’re considering selling, you can list your business for sale on BusinessesForSale.com and start reaching potential buyers.
Selling a Business From Overseas
Rachel inherited Kate’s Party Rentals, an events and catering company founded by her late mother, in South Africa in 1989. She went on to run the established business for more than 20 years.
After Rachel and her partner started a family, they decided to relocate from South Africa to the UK. Selling the company was the logical next step, but Rachel couldn’t secure a buyer before the move. That meant much of the transaction had to be managed remotely. Due diligence became more difficult, and Rachel never met the eventual buyer face to face before the sale closed.
The deal also involved seller financing, sometimes called owner financing, with part of the purchase price due to be paid from the future profits of the business.
Seller financing can make an acquisition more accessible to a buyer by reducing the amount of outside funding needed upfront. For the seller, however, there’s an important risk: you’ve given up control of the company while still relying on its future performance to get paid.
The protections available to US sellers using seller financing depend on the structure of the transaction and applicable state law. Appropriate legal and financial advice should be obtained before agreeing to terms.
Tip: Read our guide to financing a business purchase in the US for more information about seller financing.
When the Buyer Isn’t the Right Fit
After the new owner took control, the business began to struggle. Several months later, Rachel logged into the company’s email account and found customer complaints that hadn’t been answered.
“I could see unanswered complaints, from a business that never had any issues before…it was horrible, absolutely horrible. Everything [the new owner] did was not what she said she would do, and it was against the contract.”
The buyer came from a marketing background and had limited experience in sales or customer service – two important parts of running an events business. Soon after taking over, she appointed her son to a management role, but Rachel felt the job didn’t suit him.
“He was an introvert managing lots of front-of-house enquiries, which might not have been the best fit. He set up his office right at the back of the building, instead of at the front where you can greet your clients.”
For sellers, there’s a simple lesson: qualifying a buyer shouldn’t only mean establishing whether they can finance the purchase. Consider their experience, motivation and understanding of the company. Do they know what the day-to-day job involves? Do their skills match the parts of the business that keep customers coming back? If you’re relying on future payments, do you have confidence in their ability to keep the company performing?
Buyers should ask themselves an equally important question. Even if a business looks good financially, are you actually suited to running it?
Taking Back a Struggling Business
Rachel stayed in contact with the company’s five employees and continued hearing about problems after the sale.
“The staff were the most important thing for me,” she says. “In the end it wasn’t about the money, it wasn’t about my reputation, it wasn’t about any of that. It was just about making sure those people had food on their plates, that they had income and support.”
The experience also reinforced her belief that owners should be realistic about how hands-on a business needs them to be. Kate’s Party Rentals relied heavily on customer service and active management. “The minute you step away from your business, you should expect some hardship,” Rachel says. “When the cat’s away, the mice play.”
Eventually, Rachel says the buyer breached the agreement seriously enough for her to terminate it and regain control of the company. But getting Kate’s Party Rentals back didn’t mean simply picking up where she had left off. The business needed investment.
“I had to spend a whole lot of money buying more equipment, freshening up the business, getting someone really good in front of house to push up sales,” she says.
Finding the Right Buyer the Second Time
Several years later, after putting in the work and money required to rebuild Kate’s Party Rentals, Rachel listed it for sale on BusinessesForSale.com again. This time, the outcome was very different. The new buyer already worked in the catering industry and understood the kind of business he was taking on. “He was a perfect bridge for the business,” Rachel says.
Not every buyer needs previous experience in the same industry - entrepreneurs successfully enter new sectors all the time. But there needs to be a credible match between the buyer’s skills, expectations and the realities of the company. Rachel’s story highlights that starkly.
SportySkirts.net: Kate’s Party Rentals wasn’t Rachel’s only entrepreneurial venture. Drawing on her background in sports science and sports psychology, she later created SportySkirts.net, an e-commerce sportswear business for women. Rachel designed and tested the products herself, and the business has also been listed for sale on BusinessesForSale.com in South Africa.
Letting Go of the Family Business
Kate’s Party Rentals had been founded by her mother, and Rachel had grown up around the company before spending more than two decades running it herself. Selling meant giving up one of her strongest remaining connections to her mother.
After her mother died, the family discovered a letter she had written to Rachel.
“My mum had written me a letter. It was hidden, and we only found it after she’d passed,” Rachel says. “In the letter she said that I was to release the business – but I was brought up with it, I remember wrapping plates as my pocket money. So I decided to take it on.
“Now that I’ve sold it, I always go back to that letter, and remember that it’s okay to release the business. It was difficult to cut that cord, because it was the most direct link I had with my mum, the last bit of her I could hold on to and make her proud. But there had to be a separation somewhere in the sale where I said to myself – her spirit is with me, not with the business, and I’m okay to let that go.”