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Selling Your Business

If you are considering selling your business, our guide will help you get the best deal. Our corporate finance team have completed a wide range of business sales in several business sectors.

The level of economic growth over the last decade and the lower interest environment has increased the number of opportunities for owner managers to realise their years of hard work.

However, there are many aspects of selling a business including getting the maximum price possible, negotiating with buyers, keeping the discussions confidential and keeping business disturbance to a minimum.

If you are considering selling your business but don't know how much it is worth, the simple answer according to George Skelton, Partner with RDA Accountants , is that the business is worth what someone is willing to pay for it.

There are four stages to selling a business:

  • preparing for sale;
  • identifying the best purchaser;
  • negotiating and
  • closing the deal.

Set out below are 8 simple steps to help maximise the value of your business. 

Stages to selling a business include:

Preparing for Sale

 

Identifying the Best Purchaser

 

Negotiating

 

Closing the Deal

 

1. Preparing for sale

If you want to get the best price, forward planning is essential and 1 -2 years in advance is not too early to begin.

You should aim to get any contentious or disturbing issues resolved before the sale for example legal actions or uncertain ownership of assets.

If you believe your business can generate higher profits by reducing unnecessary costs or restructuring, make the tough decisions.

2. Valuing the business

After you decide what you're selling, you need to know how to calculate what your business is worth. There's many techniques to determining the value, while paying particular attention to your specific industry.

3. Tax planning

Let's be straight, no one likes paying tax. The goal of tax planning is to understand what you need to take into consideration when factoring tax into selling your business. The sale needs to be structured to your circumstances in order to gain maximum tax advantage.

4. Marketing your business

If you sell a business and no one is around to buy it, the valuation and preparation is irrelevant. There are many ways to market your business and get the word out that it's for sale. 

5. Identify the best purchaser 

You may be in the fortunate position of being able to identify a buyer for your business immediately but it would be in your best interest to commission a skilled researcher to identify additional potential buyers.

Understand the combination of the open market, buyers you already have in mind, and weighing up the best buyer for your business. It's more than just about the price. Do the buyer's values match yours, for your business, your employees and your customers.

Maintain confidentiality - if customers, suppliers or employees find out your business is for sale, it would create uncertainty and potentially reduce the value. Selling your business should be on a need-to-know basis and you should use advisor to maintain this confidentiality.

6. Negotiation

You should set yourself a top target and a lowest walk-away price. Never name your price to a potential buyer.  A wise negotiator will decide before entering a meeting how far he is prepared to go and where he will draw the line and stop negotiation.

It is very helpful to have two people involved in the negotiations. While one must be the key negotiator with ultimate responsibility the second can act as a sounding board and help in maintaining the momentum of the deal. 

A competent negotiator will involve relevant advisors such as financial and tax experts and solicitors. These should be brought in from the start and continually consulted.

7. Due diligence

So far, we've thought around our price, buyer and market but there a lot more we need to be aware of. Now it's time to complete our deep dive into the business itself. All things legal, commercial and financial are the focus here. 

8. Closing the deal

Keep your eye on the ball as too often a vendor's attention to their business wanes as they become embroiled in the sale giving the buyer an opportunity  for a reduction in price.  

As most owner-managers will only sell their business once in their life, your business may represent a lifetime of effort and achievement, make sure you do not sell yourself short. High quality professional advise from experienced financial and taxation specialists who understand owner-managed businesses are vital to ensure you get the best possible deal.
 
It is very natural for business owners to become emotionally attached to their business, after years of hard work and personal achievement. It is not an easy decision to make to sell. In our experience dealing with and understanding this is crucial to the success of the deal.
 
If you're interested in more detailed information or have any questions about selling your business, fill out the form below and we'll be in touch.