Every major decision should be careful thought through and what bigger decision is there than deciding to sell your business? It is not simply a question of putting up a for-sale sign and waiting for offers. If you want to get the best possible price, there are many things to plan and take into consideration beforehand. Here are some key areas.
Make yourself redundant
A buyer should be buying your business, not you. They will want to see a strong supportive management team which gives them confidence that the business will continue to be successful long after you have departed.
Reduce costs
Consider how to maximise profitability by focusing on operational efficiencies well in advance of the sale in order to be able to clearly demonstrate them to a prospective buyer. Focus on opportunities for tightly controlling expenditure.
Clean up your balance sheet
Remove all non-essential business assets from your balance sheet as they only confuse the picture. If possible, sell off all redundant or under-utilised assets to improve liquidity.
Ensure strong financial systems
Having strong financial controls and systems that produce reliable financial information in an accurate and timely manner are attractive features to buyers. Presenting your business with solid cash flows based on realistic and supportable forecasts, and low capital expenditure, enhances the strength of your business.
Review Customer concentration
An ideal business to some buyers has a broad customer base and little customer concentration. Where customer concentration is unavoidable, having signed customer contracts and being on approved bidder lists are regarded very positively.
Share the dream
Explain the business’s growth story and explain the vision and goals you have set. Explaining the business culture can be helpful in ensuring that buyers understand what the future business and prospects could look like.
Eliminate the family
Ensure that any and all, overt and covert “family” issues are resolved and removed from the business and that all “unusual” expenses are terminated. Normalising your books prior to putting the business up for sale should avoid possibly awkward questions and build buyer confidence.
Working capital
Managing working capital requires both time and effort but it can free up trapped cash and lower the total level of working capital buyers expect to be delivered.
Seek professional advice
Advice from season advisers can result in sizeable savings and add value. You will need advice on accounting, tax, legal and business sales and transfers.
