Have you ever considered just how many £millions you need to live a comfortable life? Well, personal aspirations is the very first question we pose to our clients when we embark on the exciting journey of preparing their business for a successful sale.
Specialising in family-owned and owner-managed businesses, our role is to help our clients position their business at its greatest possible value before choosing a buyer, something which we recommend takes at least three years’ worth of planning.
As a mergers and acquisitions boutique, we specialise in low-volume, but high-value transactions, and in this article, we reveal our best advice for those considering the sale of their business.
- Agree on a number
Based on your life today, how much would you need the business to sell for to ensure you’re happy, comfortable, and free of financial worry? The number you choose will ultimately dictate the route and length of the path ahead.
- Build the ‘A’ team that works without you
Establishing a robust team beneath you that can continue to deliver success when you’re not there is essential. It takes time and trust to get this right, despite going against your entrepreneurial instincts to make yourself increasingly redundant. This gives any potential buyer the confidence to pay a larger percentage of the deal consideration upfront and may allow you to walk away on completion. Plus, the management team that you have established may also become a potential buyer.
- Ensure what you ‘sell’ stands out from the competition
Buyers buy the best. Make sure you have a product and/or service that buyers want and that you can articulate what differentiates it from the competition. Are customers who buy your products/services tied into long-term contracts? Are they stable? All are critical considerations and steps in addition to ensuring the products/services you provide are desirable to others.
- Publicise your business
The greater the profile of your business, the more interest and intrigue from potential buyers, and the higher its perceived worth.
- Robust tax planning
With the support of a trusted team like Champion, proactively put a structure in place that minimises your tax liabilities.
- Establish a growth trajectory
Your business will be far more attractive if a buyer can see that growth potential remains and that their investment will be maximised in the long term. You need to be able to set out how much future growth opportunities add to your bottom-line profit.
- Maximise profits and cash
Potential buyers need to see far more than just your accounts. It’s important to uncover and interrogate your true profitability when presenting a business for sale and add back any costs that would not incur under the buyer’s ownership. Businesses are bought on a cash-free debt-free basis, which means that any surplus cash in the business is added to the headline price, pound for pound, and any debt would reduce the headline price, pound for pound. The key to getting access to the above financial data is having quality financial systems and regular reporting in the form of monthly management accounts.
- Find the right buyer
A large part of our role is, of course, finding the right strategic buyer who will pay a premium price for the business. The structure of any offer is paramount, and a buyer that offers the most money isn’t always the best option. We sit down face to face with you and multiple potential buyers to establish whether they will maintain the business culture, thus safeguarding your legacy and the employees’ futures, many of whom you will have worked with from day one. This is often a more critical consideration for business owners when selecting a buyer than the headline price itself.
Selling your business is one of the most important – and emotional – decisions any business owner can make. Building a sellable business takes time and is often fraught with personal sacrifice. As expert negotiators, we’re committed to generating the best results and adopting a relentless approach to achieving the deal for the business that you’ve nurtured so dearly.
To find out more, contact Cleveland Scott:
Co-Founder & Managing Director
T: 07808 773 456