You’ve spent years working passionately and relentlessly to build a business empire and it’s inevitable that at some stage you’ll consider an exit. Whether its retirement, moving onto pastures new or handing over the company to a larger organisation, here are our five steps to sale success.
1. Preparation
Preparing for a sale as early as possible provides enough time to invest in a spot of housekeeping to ensure your company and its records are in order. Improving your financial information, company structure and client base will put potential buyers at ease and keep the business running smoothly throughout the sale process.
Despite the availability of bank funding in short supply, there’s currently huge demand from private equity houses and strategic buyers interested in snapping up profitable businesses, which makes now an ideal time to go to market.
2. Setting the price
By reviewing similar deals in the marketplace at that time, your advisory team can determine a realistic picture of how much your business is worth, ensuring it isn’t priced too low or high.
Once a figure has been agreed, it’s crucial that your business continues to grow. Buyers are particularly interested in the growth potential of a company, which is why you must demonstrate its scalability. Don’t simply rest on your laurels by ensuring that you continue to look for growth opportunities and efficiency measures in all areas of the firm.
3. Negotiation
This is where your advisor’s experience proves vital to ensure a favourable sale for both seller and buyer. Often the hardest part is remaining patient. Whilst many entrepreneurs think they’re excellent negotiators, trying to coordinate a business sale can prove far more intense and time-consuming. Getting the best results requires a combination of speed, predictability and coordination.
4. Due diligence
Buyer due diligence usually includes a review of all accounting, tax, banking, legal, HR, IT and property, as well as investigating your customers, products, environmental issues, outstanding litigation and so on.
This is one stage of the process that tends to linger on, with some business owners agreeing to items they don’t want / need and selling at a lower price than they deserve, just to speed things up.
Before committing to the deal, the purchaser will want to verify everything they’ve been told about the business, as well as identify any items which could justify a lower sale valuation. While you don’t have to legally volunteer information that could deter a buyer, concealing important information or lying could open you up to a future legal claim.
Remember to stick to your guns and trust the judgements of your advisor, who is working hard to get you the best possible outcome.
5. Maximising the proceeds
Regular changes in legislation make it important that you remain aware of any tax, legal or sector-specific issues that could impact the sale profits – something that your advisor can assist with.
And now celebrate! Once the documentation is signed, funds transferred and business changed hands, it’s time to enjoy the fruits of your labour!
We understand that selling your business can be complicated and stressful, which is why it’s essential to seek help from a specialist team with genuine business acumen, like Champion Accountants, that can assist with what will probably be the biggest financial transaction of your life.
Our proven track record of selling businesses from £1m – £20m can make a real difference in maximising value and minimising distraction. For more information, contact Ged Cosgrove on 0161 703 2500 or email info@championgroup.co.uk.
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