When you begin to think about selling your business, it can seem like a daunting undertaking.
This is not only because it means parting with something you’ve built from the ground up, but also because of the complicated process involved. However, if you follow this advice, it may take time, but it doesn’t have to be complicated.
Good preparation is the key to selling your business effectively.
To make this possible, you have to emotionally, and literally, detach yourself from the business; the former will allow you to make assessments logically, while the latter will demonstrate your company’s good health and free up more time for you to focus on the sale.
Stepping back may be a gradual process, but before you reach the point of listing your business for sale, you must be confident that you aren’t its lynchpin.
This will quickly become evident to anybody observing its day-to-day running and act as a red flag against making an offer.
A buyer must be able to imagine the business without you in it.
With a clear head and the knowledge that you have delegated, you should then sit down and compile a list of all the documentation you need, such as:
- Financial records, including profit and loss accounts, bank statements and tax returns.
- Contracts with employees, customers and suppliers.
- Papers relating to premises, such as leases, deeds, insurance policies.
- A confidentiality agreement: the legal document to protect you from unwanted disclosures by prospective buyers.
As you work through your check list, you can make sure all of the details in these papers are correct and that they are also up to date and fit for purpose.
Carrying out this due diligence will mean you are ready to lay your cards on the table and answer any questions a buyer may have.
If you are running your business well, much of this preparation will come easily to you because you will have established a maintenance schedule for paperwork. Even if you aren’t as on top of these things as you should be, this process will actually make your business a lot more attractive.
Getting the valuation right makes the difference between deterring potential buyers with an unreasonably high price and allowing a satisfactory conclusion with a fair and measured one.
Of course, you don’t want to go too low either, or you will regret parting with a valuable asset too hastily.
Although a rough guide can be obtained by learning of similar businesses in comparable areas for sale, your company is truly unique and can only be treated as such.
Your profit and loss statements will give you a more focused figure, as will an audit of assets and an understanding of the market. A financial advisor can interpret all of these aspects, making their fee a very worthwhile outlay.
Finding the right buyer
Listing your business for sale in the right place is crucial because you want to know that those who see it aren’t time wasters. Similarly, the amount of information you include can help to avoid attracting the wrong people.
By giving plenty of detail about the nature, size, location and asking price of your business, you can narrow down enquiries to those who are genuinely in the market for what you’re offering.
But, this doesn’t mean you should include sensitive financial, legal or practical information as these finer details can be shared after serious enquirers have signed the confidentiality agreement.
Selling a business is a big step. It has to be done at the right time, in the right way, to the right buyer and no part of the process can be hurried. By following these steps, it will be straightforward, far less stressful and a satisfying transaction for all concerned.
Finding the right professional for selling your business
Selling your business is often a once in a lifetime opportunity for owners. A strong team of three professional advisers will smooth the way to a successful sales at best value. They usually add value and more than pay for themselves – providing you get the right team. Read more here in this blog. CMC Business Advisors over the last 27 years have been involved in many business sales, reaching a total of over £156 Million to date. If you need help with listing your business and would like help with selling your business and need the right team, contact CMC Business Advisors
By Jo Thornley, Head of Brand and Partnerships at Dynamis.
Joining in 2005 to co-ordinate PR and communications and produce editorial across all business brands. She earned her spurs managing the communications strategy and now creates and develops partnerships between BusinessesForSale.com, FranchiseSales.com and PropertySales.com and likeminded companies