Preparing to sell your business and realising its value

If the business owner feels the company is almost at its peak, and/or it needs investment to move it forward, then it may be that a decision is made to exit the entity.

All business owners should consider their exit strategy in order to realise a company’s true value. Preparing a business for sale is one of the most important periods in a business’s life cycle. The time spent on planning, thought and effort will have a significant impact on the value realised. It is important not to rush the process and to take the necessary steps in order to present the business in the most appealing way. This could take several months but it is crucial in ensuring the achievement of maximum value for what could be your most valuable asset.

What needs to be considered to get my business ready for sale?

All businesses are different but some typical areas to focus on ahead of a sale are:

• What is the underlying profitability of the business?
• Does property need to be extracted from the company?
• Are employment contracts in place and up to date?
• Can customer contracts be extended?
• What is the quality of the financial information?
• Are financial forecasts prepared and appropriate?

What advice should I seek prior to selling my business?

Before embarking on a sale process or engaging with perspective buyers, I would always recommend engaging with experienced professionals, including corporate finance, tax and legal advisors who can:

• Review the business from the perspective of a buyer and how they are likely to value it
• Propose an appropriate deal structure
• Identify the strengths and weaknesses of the business in order to position them correctly
• Identify and resolve any issues in advance to protect value
• Ensure that the information a buyer will want to review during their due diligence phase is prepared appropriately
• Advise on any tax issues which might impact on the deal or cash realised by the sellers

The case for planning and preparation

Through a recent transaction experience, we found it very challenging to achieve the price expectations and real value of shares for sellers who had not planned for their business exit.

In short, the sellers were unexpectedly approached and many of the issues which arose during the course of the transaction could have been mitigated if the exit had been more considered. The sellers in this case should not have rushed into this process. Although the offer was good, they could have potentially sold at a higher price.

Having the right systems and people in the growth stage is key in the planning. If you would like to understand more about how we can help you prepare and ultimately sell your business please do get in touch.