Selling a business requires forward planning
As important as the right plan for starting and growing a business is, an exit strategy for when the time comes to sell a business is just as vital to ensure the company is in the optimum shape it can be for the best deal. Selling a business requires planning and preparation, and if the timescale on exit is short, the outcome will be affected.
A study into how many owner-managed businesses are looking to sell highlighted that almost a third of these SMEs plan on selling a business in the next five years. This high percentage could be attributed to the delay the recession might have caused, with many business owners not wanting or able to sell in the time of recession or the following years of slower growth. However, despite this high number of potential exits, almost half of business respondents in the same study had no idea who they would target as a potential buyer.
So in order to ensure the best deal and the widest variety of options on exit, here are some guidelines to prepare for selling a business.
Get everything in order – from ensuring accounts are up-to-date and having comprehensive management accounts prepared and available, to wiping any debt and resolving disputes, these are tasks that should not be postponed. Ensuring that by the time it comes to sell the business, there is a clean bill of health and all the required documentation in place is key. Due diligence in this area is vital to present the business in the best possible light.
Consider potential buyers – having an idea in mind of who could be the potential buyer when selling a business will help with focusing on the activities that will support the business in the way the target buyer would want. Assessing what could be incorporated into the business that will add value for the buyer will help greatly in making it an attractive proposition in the future. It is also important to have an array of options in mind for potential buyers – keeping the vision flexible will help seal the most profitable deal in the end. Limiting the options may result in a poorer deal in the end.
Execute a ramp up – whilst anyone considering selling a business might not feel as motivated as they once were, it’s important to keep pushing the business in the right direction for maximum growth potential, keeping those books looking healthy. The old adage ‘sell high, buy low’ applies here – selling on a high will optimise the deal.
Get professional advice – an accountant or business adviser will be able to help with the checks and questions business owners will face when selling a business. The devil is in the detail, so investing in professional services well ahead of time to reap the rewards at the selling point.
Good planning, preparation and due consideration can’t be started soon enough when it comes to selling a business. After working so hard to establish a business, any owner will want a deal they deserve and due reward for the years of hard work.
Thinking of selling a business and need advice? Call us now on 01827 54944.