Five tips for selling your Business

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For many, the sale of a business is a once in a lifetime experience, which means it is important to get it right, made harder by the process being unfamiliar. Whether you are simply contemplating a sale of your business or are about to embark on that journey, below are five tips to help you achieve your aims.

1.         Be Realistic

Almost everyone running their own business has an amount of money in mind for which they would be prepared to sell the business. However, in most cases the sale process is initiated by the seller, who invites offers. It is important therefore to be realistic as to what an achievable price may be. Clearly the success of the business and the value of its assets will have a major bearing on price but it is also important to understand who the potential buyers may be and how much they may be prepared to pay for it. A business is only worth what someone is prepared to pay for it. Furthermore, if you have fellow shareholders or partners, do your expectations match theirs? A number of potential sales fall over as a result of difference in the expectations of the selling parties.

2.         Be Prepared

Once you have a buyer who is interested, no doubt that person will want to carry out extensive due diligence about your business. In most cases no stone will be left unturned. If you have any serious issues with the business that you have not got around to addressing or if you are aware of deficient or defective paperwork that needs rectifying, now is the time to deal with these. This will avoid either the buyer seeking to reduce the purchase price or deciding to withdraw from the transaction.

On a practical note, if you have documentation you know the buyer will ask for, it is worth starting to collate it at an early stage. This will avoid standing round the office photocopier at midnight, once staff have left, trying to gather important documentation.

3.         Flexibility, Patience and Focus are Key

The whole sale process can in some cases take years.  Typically the timespan between deciding to put your business up for sale and completing the transaction will be between 12 to 18 months. During that time the seller will experience a roller coaster of emotions, in many cases the goal posts will change and you will need to adapt to these events.

When advising selling clients one of the first warnings we give them is that they will become frustrated and fed up with being asked to give responses to what feels like “the same question five different ways”. In most cases whilst this is avoidable it is somewhat inevitable.

One of the hardest parts of the process for the seller is dealing with and focussing on the sale process whilst at the same time continuing to run a successful business and maintaining its value without becoming distracted.

4.         Less is More

Less than a decade ago, if you were selling your business you would have expected to receive all the consideration on completion. Nowadays, that is unrealistic and in almost every transaction there is an element of deferred consideration. However, you need to consider very carefully the basis upon which that deferred element is being paid. If you have an unconditional right to the deferred element then all well and good (subject to you being happy that the buyer has the resources to pay at a later date), but if part of the consideration is conditional on some future event, for example, the buyer being able to successfully trade the business post completion, then you need to be wary and fully understand the implications of this. Often buyers will entice sellers into accepting a higher level of risk around the future consideration by offering a higher headline price. You must consider your risk appetite carefully. How would you feel if you did not achieve the full expected level of the earn out consideration? Are you happy receiving a lesser amount with a greater probability of receiving payment?

5.         Use Professional Advisers Early

The sale process can be tricky and full of pitfalls. It makes good sense to get professional advisers on board at an early stage so that any issues can be raised and problems dealt with.

In most cases it should not result in substantial additional charges and will ensure that the deal agreed is more likely to be the best one for you. It also avoids nasty surprises derailing the process at a later date, once substantial fees have been incurred.

If you are considering selling your business please feel free to contact us. We would be more than happy to send you a due diligence questionnaire to give you an indication of some of the questions you may be asked about your business as part of the process.

We are also happy to meet on a no charge, no obligation basis to discuss the proposed sale of your business, whatever stage of the process you find yourself at.


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