If you’re a salon owner and you’re thinking about selling your salon one day, how do you choose who the potential buyer is? What makes you choose one suitor or one buyer over all the others? What is it that sets winning buyers apart from all the wannabes?
First off, as the salon owner, you have to evaluate whether the potential buyers meet your exit objectives. Now, what do I mean by exit objectives? At a minimum, one of your exit objectives should be a financial or timing objective.
The financial objective is the amount of cash you want from the sale to help you achieve your financial goals. Can this buyer deliver that amount of money?
Meanwhile, the timing objective is when you want to leave. Do you want to stay on with the salon for a few years after closing, or do you want to leave the closing table and head for the first flight to Cabo?
Now, if all works well, you end up having several buyers who can satisfy your financial and timing objectives. But in that case, who do you then choose?
In my experience, selling salon owners choose buyers who make them feel comfortable.
A few years ago, we represented a salon owner who had built a world-class salon without ever losing sight of the role her employees played in her success. She treated them with great care and respect, and in return, they stayed with her salon for years.
This solid employee base was one of the salon’s strongest value drivers, and it enabled the salon owner to demand a premium price for her salon. And it made potential buyers willing to pay for it.
Actually, one of those potential buyers was a financially strong suitor whose offer more than satisfied the owner’s financial objectives. And while this owner was considering the offer, the buyer made lots of comments about how he planned to change personnel, some of the operations, and the overall culture.
But what he was doing is he was being insensitive to the owner’s desires about how she wanted her employees and her customers to be treated after the sale. As a result, this salon owner eliminated this suitor from further participation in the sales process.
In a totally rational world, this deal would have closed. But in our world of nuance and emotions, the salon owner rejected the suitor’s offer. The suitor not only didn’t read the vibe of the salon owner, but he also failed to tailor his behavior to the owner’s style.
Tailoring behavior means avoiding discussions of any philosophical differences regarding management, for example, and instead emphasizing their similarities.
Specifically, if a salon owner is eager to close, buyers would be smart to speed up the process. Or, if a salon owner has other non-financial exit objectives, and they often do, a savvy buyer would find creative ways to meet them, or at the very least, to carve out some middle ground.
So, in addition to understanding a salon owner’s exit objectives, buyers would do well to understand the ego of the owner of the privately held salon. These owners derive, to varying degrees, their identities from their salon business. Their salons have, over the years, demanded personal sacrifices and afforded great opportunities.
As a result, salon owners want to be acknowledged for their hard work and business acumen. In short, they want a little respect.
Buyers who win the beauty contest, the ones that reach the closing table, may do so because they have satisfied an owner’s expectations and exit objectives, whether stated or unstated, and have appreciated that salon owner’s state of mind.
Looking for more tips on how to grow, scale, and ultimately sell your hair salon business? Check out our other Unchained From the Chair podcast episodes.