Selling a business is a demanding, stressful, and often emotional process. Good preparation will help make it all go more smoothly and maximise the sale value. Here are some steps you can take.
Due diligence, a thorough investigation into the affairs of a company, is the key process to be carried out ahead of the sale.
It is essential to have your paperwork in order before the process begins. Focus especially on:
Be aware now of factors that may affect the success of the sale, or its value. If you identify anything that may be of concern to a buyer, you may be able to act now to potentially address the issue.
For example, is the business heavily reliant on a key customer or a key employee – most probably you as the business owner?
Are your key customer relationships documented in writing? If not, make sure you get written agreements signed. Note any contracts that are only for fixed terms – any buyer may want reassurance about the level of income that can be generated by the business once these contracts end.
Identifying and mitigating issues like these will help make your business far more attractive to a purchaser.
Selling a business is a complex process with many moving parts. You will need to assemble a team of specialist advisors, and it can be helpful if these have experience of working with the kind of business you are selling.
Your team should include:
You will want to put yourself in the best possible position when it comes to negotiating a favourable price for your business. Poor record keeping, inefficient debt chasing and disorganised invoicing can all adversely affect the value of the sale.
Take time before beginning the sale process to work with your accountant to ensure your processes are clean and accurate. This may involve streamlining reporting and improving your invoicing and credit control processes.
However well you prepare, selling a business is a demanding process which must be carried on whilst still ensuring the company is successfully being run. The business’s performance up to completion, and potentially afterwards, will impact the overall value you receive. The more of the above that you can carry out in advance will help ease the large demands on your time – but it’s also important to make sure the business continues to succeed now and is set up to do so after the sale.
You may need to consider whether certain senior management may need to be brought on board to assist with the sale, particularly if they have the key knowledge and information in certain areas. Bear in mind that the buyer is essentially investing in your senior team for the transition after your exit, and so they may want to meet the key players.
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